Your commissions are calculated as follows: [ describe how commissions are calculated ]. Definitions [ provide detailed definitions and descriptions of the terms used to describe an earned commission, including for example such terms as a "closed sale" ] Earned Commissions — The salesperson must be a current, full-time employee at the time a product becomes a "closed sale.
No commission or bonus will be earned until [supervisor's job title] has determined that a transaction is a "closed sale. Commission payments upon termination — Commissions are only earned while you are an employee.
Should you terminate your employment or be terminated by [company name] , you will earn commission ONLY through your final date of employment. You will not be eligible to earn any further commissions on future revenue. Commissions will only be paid on sales that are closed as defined above on or before the date of termination.
Bonus Compensation You may be eligible to earn bonuses from time to time based upon a variety of factors. The terms and conditions for such bonuses may vary according to the circumstances.
Hourly Compensation "Non-Sales Activity" As a salesperson, your duties and job requirements will require you to spend nearly all of your working time engaged in sales activity.
In addition, you will be paid an hourly wage rate of [amount at least applicable minimum wage ] for time that you actually spend engaged in non-sales activity that you report. You are required to carefully document your time each pay period so that all non-sales activity is accounted for in your time record. The amount of the draw will be calculated by [insert details on how draws are calculated, including minimums and maximum amounts].
The draw will be repaid as follows:. The company reserves the right to withhold the outstanding balance from any accrued vacation due at the time of termination as well as from any other form of compensation due to the salesperson to include salary, commissions, incentives, buy-back of stock differentials and reimbursable expenses, as permitted by state law. Paid time off will be paid at [minimum wage or the hourly rate of the average total wages earned by the salesperson over a defined period of time or another defined rate].
An employee on a leave of absence who has earned commissions as described above will be paid for earned commissions while out on leave. Overtime Premium Pay If Applicable Productive employees generally will be exempt as commissioned salespersons from overtime wages. Your eligibility for overtime will depend on the level and structure of your compensation.
Your position is currently classified as [exempt or nonexempt]. If you are eligible for overtime wages, you will be paid as follows:. The regular rate of pay is calculated by dividing all compensation received in the workweek by the total number of hours actually worked. The company pay days are [ insert pay days ]. These pay dates are subject to modification for weekends and holidays, as detailed in the employee handbook, which is incorporated by this reference into this agreement.
Time-keeping, Rest Breaks and Meal Periods You are responsible for keeping accurate time records, including recording each day when you 1 start and end work, and 2 start and end your meal periods. You also are required to carefully document your time worked each pay period so that all non-sales activity is accounted for in your time record. As an example of one such experiment, consider recent work my colleague Das Narayandas and I did with a South Asian company that has a retail sales force for its consumer durable products.
The company uses a simple system of linear commissions—reps earn a fixed percentage of sales, with no quotas, bonuses, or overachievement commissions. For one of our experimental groups, we created a bonus that was payable at the end of the week if a rep sold six units.
For another group, we framed the bonus differently, using the well-known concept of loss aversion, which posits that the pain people feel from a loss exceeds the happiness they feel from a gain.
Instead of telling reps they would receive a bonus if they sold six units, we told them they would receive a bonus unless they failed to sell at least six units.
The results showed that all three types of bonuses exerted similar effects and that in every case the group receiving the bonus generally outsold the control group. Whereas bonuses are viewed as transactional, research shows that framing something as a gift creates a particular form of goodwill between the giver and recipient.
We found that the timing of a gift directly influences how reps respond: If you give the gift at the beginning of a period, they view it as a reward for past performance and tend to slack off. If you tell them they will receive a gift at the end of a period, they work harder. We concluded that if companies want to encourage that kind of reciprocity, they need to pay careful attention to timing. One paper presented at a conference in showed that if salespeople receive cash incentives for passing tests about the product they are selling, they will sell more.
This is an example of sales compensation based on effort as opposed to results. Another recent field experiment found that sales reps valued noncash incentives such as points that could be used for vacations or for items such as televisions more than the actual monetary cost of the good the points could purchase.
As more researchers and companies embrace the use of field experiments, sales managers will learn even more about the best ways to motivate their teams.
After spending a decade in academia studying sales force compensation, I sometimes wonder what would happen if I were transported back into my job as a management consultant.
What would I tell sales force managers to do differently? Some of my advice would be straightforward: I would urge managers to remove the caps on commissions or, if they have to retain some ceiling for political reasons, to set it as high as possible.
I would tell sales managers to be extremely careful in setting and adjusting quotas. For instance, the research clearly shows that ratcheting quotas is detrimental. Finally, I would urge my client companies to consider experimenting with their pay systems. Involving academic researchers in these experiments can be beneficial: Having a trained researcher take the lead generally will result in a more controlled environment, a more scientific process, and more-robust findings. These studies also help the world at large, because research that improves how companies motivate salespeople will result in better and more-profitable businesses for employees and shareholders.
You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access. Create an account to read 2 more. Compensation and benefits. How to Really Motivate Salespeople. New research challenges conventional wisdom about the best ways to pay your team. The Implications Many companies use experiments to improve pricing, marketing, and website design.
Researchers have begun persuading companies to share their data about their pay plans. Sales reps work harder for the chance to earn a reward than they do after receiving one. A version of this article appeared in the April issue pp.
Read more on Compensation and benefits or related topics Motivating people and Sales team management. Doug J. He teaches a course on sales and sales force management at Harvard Business School.
I know don't be a prick about it. If that sale person was really was a jerk. The name is Art. My heatware. I rarely go into FS these days. But I remember in the past that I couldn't get anyone to help me and was very adamant at the register that no one helped. The same sales people that ignored me would chase after me once I picked my item and started walking to the cash.
On one occasion, I was waiting for my brother in the computer department. I watched as one male customer after the other was approached by sales staff but not me. The sales people seem to think that since I was a woman I couldn't possibly be purchasing anything. Their loss. More recently, I asked a sales guy to get a printer for me off the top shelf.
Initially, he was going to climb on the shelving unit when I told him to get a ladder. I didn't want him to get hurt or for the boxes which we packed high to fall on me. While I was waiting for the first guy to come back with the ladder, another guy comes along and asks if he can help.
I said "No, I am waiting for someone to come back with a ladder. I point out the printer. First he starts looking around for another one. I point the first sales guy already checked, that this one the only one. He then starts climbing up the shelving unit. I tell him to get down, the other guy is coming with a ladder and I will wait for him. Climbing on shelving units is a big no-no. After scaring the crap out of me by almost knocking several large boxes over on me, he gets the printer.
He then starts ringing in the sale. I am stunned as he is trying to steal a sale from a colleague. I tell him that the other guy is helping me. Finally, the other guy shows up and is noticeably and rightly pissed. They start to argue and I insist that the first guy was helping me.
The whole episode made me very uncomfortable. I think the first guy thought I was also trying to take the sale away from him. The point of this story is that sometimes customers get stuck in the middle of sales reps.
So many times, we want nothing to do with sales reps. Perhaps, something similar happened to the customer mentioned above.
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