Want to motivate your sales team to success while reducing overhead and employee turnover? What is the right way to compensate them for their efforts – salary or commission?

Let’s start by looking at the two styles of compensation:

Salary – A fixed rate per pay period for your sales team. Provides them with steady income and some measure of loyalty. Doesn’t really provide motivation for reaching and achieving stretch sales goals. Doesn’t require any sales to obtain. A fixed cost your firm has to pay regardless of sales level.

Commission – A fixed rate per sale. Ultimately that means their pay is dependent upon making sales or they don’t receive a paycheck. Strong motivation to make sales and achieve stretch goals. This is a variable cost for your business and amounts can get very large based on sales volume. The good news is the variable cost is directly tied to sales in your business. However unreliable income could lead to employee turnover and increased training costs and sales ramp-up period.

There are big pros and cons to compensating your employees by salary or commission. So what is a janitorial business owner to do to fairly compensate sales professionals without breaking the bank and causing constant employee turnover?

The solution is actually a blend of the two. Provide your sales team with a marginal standard base wage or salary. This is critically important with new employees without industry contacts or an established customer base. It also helps with business seasonality and in economic downturns - like right now. You will see your sales team employee retention increase leading to lower turnover and training cost.

Balance the small standard salary with a commission opportunity based on sales goals. It could be a bonus structure for achieving certain sales goals or a scale that increases with the number of sales obtained. This will motivate your sales team to aggressively achieve sales and it will directly reward desired sales levels. The commission will also be paid out of sales, so the impact to your business will be based upon money coming in.

So as you can see, the answer to the age long question of how to fairly compensate your sales team is a blend of both salary and commission. It leads to happier and more stable employees that are motivated to drive sales, exceed quota and take your janitorial business to its next level of success.