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Reduced Sales Salaries Squeeze Commissions, Retention

“You want to make what you were making? Sell more.”

That’s the mantra for many sales departments lately.

In an attempt to lower costs and squeeze any and all business out of sales departments, salaries and commission structures  have been reduced, reworked and adjusted in favor of the company. In a recession that has forced most organizations to cut costs across the board, reduction of pay does not exclude the ones bringing in business this time, says a Workforce Management article.

A June report from consulting firm Mercer found that sales professionals were near the bottom of the pecking order with respect to changes in total cash compensation during the past year.

Workers in six job functions saw their median pay increase year-over-year while those in three job functions suffered a drop, Mercer said. Those in finance weathered a 0.2 percent decline, those in sales were hit with a 0.6 percent decrease, and those in marketing fared worst with a 1.3 percent drop.

Dave Kahle, president of sales consulting and training firm The DaCo Corp., says he notices firms paring back base salaries for sales employees and expecting them to earn more through commissions. More companies “are trying to put more of the risk on the salespeople, because they’re trying to protect their costs,” Kahle says.

But is it a good idea to penalize workers directly tied to revenue acquisition? Some experts disapprove. What’s at stake is morale and motivation. When revenue earners see less ability to earn, they start looking for the next job. Times may be tough, but do you want to retain your top performers or give them incentive to leave?

Salespeople want to work in companies where 70 percent to 80 percent of the sales team hit their bonus targets, says Gary Damiano, vice president of marketing at business software firm Host Analytics.

But Damiano cautions that firms should not set base pay levels so high that sales employees grow complacent. That balancing act is “the challenge of doing sales planning in today’s economy,” he says.

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