I am in the middle of purchasing a business with a few sales staff. Currently their compensation package is Base Salary + Commission (7% of contract sale). Is this the best and most liked compensation package for sales staff? Their base is $30K-$40K.
Background, this is for a construction company where contracts are relatively large, but not high volume (specially in the winter months). Best performing salesman can easily earn over $120K (based on this years numbers).
I want to find a way to keep the sales staff motived and wanting to generate revenue as the new owner.
Should I offer different options of compensation packages? Should I have sales goals with incentives attached to them? Should I offer higher base, but deduct that if sales aren’t met?
Any advice is greatly appreciated!
I’d see who your best performs under your ownership are and ask them for their opinions.
If it’s working I’d probably just leave it alone for a year or two and then only make changes once you understand the company more.
Immediately changing things for the sake of changing things is going to likely make it much harder to get them on board with new ownership.
Salespeople tend to be very flighty. You’ve gotten good advice to not touch their compensation. This really applies to everyone at a recently acquired business. It’s never good to come in and make wide sweeping changes. Basically for the first year, only do things that can only be viewed as a positive.
That said, in my business I pay biz dev people a flat salary plus commission % which is tied to net profit. My projects are generally $100k+. Commission varies but it goes to zero after the third project from the same client. I’ve dealt with a couple of issues related to, well known guy doing BD. I have a client reach out to me directly. BD guy says oh I’ve known him forever glad I was here to make him comfortable. No, a random LinkedIn msg you were ghosted on 10 years ago doesn’t count. IE commission has to be some kind of direct recent thing that specifically brought in the client.
I’ve also been involved with issues over repeated clients. You get your % off of the first three projects, that’s it.