> Hiring Commission or Base + Commission ?
Hiring Commission or Base + Commission ?
I need some general advice on hiring sales reps. I've got a start up marketing firm and I'm getting ready to start the hiring phase.
Money is tight and I really want quality sales reps so I was thinking of doing the pure commission route but I've heard from more then a few that independent contractors can cause major issues.
A few friends in the biz told me to hire people at minimum wage or close to it plus commission so they are real employees. I could swing that now but won't it cost me a lot more in taxes? - by Searchpl
Yes it would be more in taxes and paperwork.
From my experience, you have more control over employees who work directly for you so you may be able to offer more quality going that route. You can pay minimum wage and a commission so I would advise to also offer an alternative plan with an all competitive commission and see which plays out better. - by Wonderboy
It sounds like exiting times in your business!
"Straight commission" and "independent contractor" status are two different issues. It's possible, and even common, to hire straight commission employees who are employees.
Good luck! - by Skip Anderson
Thanks guys. Skip could you point me to some information about hiring employees as straight commission? I thought we had to pay minimum wage if we do that.
Thanks! - by Searchpl
Commission versus salary is a question I have seen come up a lot through the years.
Salary plus commission
seems to be a bridge between the two extremes at least in the eyes of many of the employees. How management tends to view the options tends to be a different matter. - by reselling
Straight commission is merely a way to pay someone based only on sales performance (as opposed to an independent contractor which is also paid only on performance, but also is not an employee), but they are an employee so must receive benefits that any of your other employees receive. Another factor is that it's sometimes more difficult to require certain office hours or other tasks if the employee is working on straight commission. I'm not an accountant, so you may want to check with an accountant regarding tax and financial implications.
Many straight commission salespeople earn a "draw against commission" which is basically a loan based upon future production. Usually, but not always, this is non-recoverable, meaning if the employee quits, they keep their draw with no obligation to you.
You can set up commission compensation many ways, as long as an employee understands what they're getting into when they join your company, and also that you are able to retain employees.
The best to you! - by Skip Anderson
My thought is that both the commission and the independent contractor deal alienate your sales folks. If they are smart, they keep the best deals for themselves and broker them out to someone else for better money. After all, there is no loyalty between the parties. Only expediency.
My other thought is why a marketing firm needs salespeople. That's beyond me.
As Peter Drucker once said...
"There will always, one can assume, be need for some selling.
But the aim of marketing is to make selling superfluous.
The aim of marketing is to know and understand the customer so well that the product and service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available; i.e., logistics rather than salesmanship, and statistical distribution rather than promotion." (Management: Tasks, Responsibilities, Practices - 1974)
If you have good marketing in place, people will come to you. Otherwise it becomes a credibility problem: Why should I hire you if I still need to hire an army of salespeople to dial for dollars and pound pavements to do "chase -> hunt -> hound -> pound" type mind-bending, soul-sucking bone-jarring cold prospecting grunt work. Which also means that the marketing part doesn't work. But proper marketing always work.
And one more thing, while I'm on the roll... Would you work with your clients on a 100