Question

Topic: Strategy

How To Implement Pay Package For Sales Manager

Posted by ziczacxann21 on 10/20/2011 at 6:48 AM ET 250 Points
I am going to promote a salesman to become sales manager.
His basic salary will therefore increase but I have to increase his target as well.

How do I balance these?

In the past, his salary was low but his sales target was set low and therefore quite easy to achieve, so he was taking home a total package (salary+comm) of about 10% of his sales.

Now I am going to increase his basic salary, and increase his target. I expect more from him because:
1) we're moving to a better location with more visibility
2) there are more potential / target customers in that new location
3) our product is now getting more popular
4) and most importantly i'm sure he can do it, he's a good salesman

What are the points that I should consider?

By the way, since he'll be manager, should I base his target on the total sales done by him PLUS his team members? Or should his sales target be based only on the sales he has done, and add an additional flat percentage of those sales done by the members in his team?





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RESPONSES

  • Posted by CarolBlaha on 10/20/2011 at 7:22 AM Accepted
    His bonus should be on the total sales by others plus himself.

    There are many selling sales managers. But as a sales manager his first goal is to develop the other sales people to create the new superstar. You need to structure this so that he is not in competiton with them. And he needs a structure so he doesn't have to outsell them to make a living, or he is in competition with them vs supporting and developing them. To be sales manager his main goal is the development and success of others vs his own personal sales.
  • Posted by ziczacxann21 on 10/20/2011 at 8:02 AM Author
    What about increasing sales target, what are the points I should take note? Can anyone show me some calculations? Thank you.
  • Posted by Peter (henna gaijin) on 10/20/2011 at 1:04 PM Accepted
    Always provide incentive based on what you want done. if you get this wrong, you will find they are doing what you provide incentives for them to do, not what you want done.

    So, if you want him to manage and grow the sales of the team, a good part of his incentive should be on how the team is doing. So base it in part on the total sales of the team.

    His personal target may actually have to be reduced, so that he can take some time to focus on improving the sales of his team. If you raise his personal target, he may spend his time focusing on that, to the detriment of the team's sales.
  • Posted on 10/20/2011 at 5:35 PM Accepted
    Carol nailed it. Re-read her post.

    As for increasing his target, it's irrelevant since the reward is going to be based on what the team does.

    What's wrong with 10% for total store sales? Let the sales manager figure out how to compensate the team, as long as it comes out to 10% of sales.

    If you want to give him a base salary, just make it a non-refundable draw against his commission. That guarantees him that in a terrible month, he still gets that minimum amount.
  • Posted by ziczacxann21 on 10/21/2011 at 2:06 AM Author
    Yes I'd like this guy to be a working manger, and I would like to be careful when increasing his sales target.

    I'm worried he may be unhappy thinking that he is earning less due to the increased sales target? How do I manage this?

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