What's better -- straight salary or commission?
- Article by: MATT KRUMRIE
- January 23, 2012 - 11:32 AM
Dear Matt: I'm looking at a career in sales and considering a job with a company that has offered me either a straight salary with some bonus potential or straight commission with a chance for higher reward, but higher risk. How do I know if straight salary or commission is the best option for me?
Matt says: Andrew Schmitz, president of Twin Cities-based Blue Octopus Search and Consulting LLC (blueoctopusllc.com), is not afraid to say how he feels.
"I hate both straight commission and straight salary sales jobs," said Schmitz.
In addition to his current role as a recruiter and consultant, Schmitz has received accolades as a top performing sales professional during his career.
"I think all sales positions really need an element of both a base salary and commission, and that is what the job seeker should either negotiate or seek out with another organization," said Schmitz.
"Having been a sales person, hired sales people, and managed sales people, I've consistently seen that the best performers are on plans that have a base salary plus commission. The base shouldn't necessarily pay the bills, but it gives the sales person some security to handle the up and down fluctuations. The less-than-satisfying base should provide further incentive for the sales person to hit their goals and attain a sizeable commission."
Here is a structured example, from Schmitz: If you have a $50K base, a salesperson should have a shot at an additional $100K in commission (at least twice the base salary) if they have a great year and put in great effort. That same position should pay a $50K commission if you have a good year and hit your plan. If you have an average year, you should receive little commission, but retain your job. If it was a below average year, it's probably time to start looking for a new job that you are better suited for.
Good sales people actually can maintain a pretty consistent total compensation, but you need to make sure you have the stomach for fluctuations that can occur, Schmitz said.
"If you are given the choice of straight commission or straight salary, I think they are both equally unfair and I would negotiate a hybrid of the two," said Schmitz. "The great thing about sales is that you can work for someone else, but have some control over the size of your paycheck. If you are wired for sales, you will thrive on that concept."
Matt Krumrie is a Twin Cities freelance writer specializing in career advice.
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