At small, fast-growing businesses, where so much rides on key salespeople, it's important to set up a compensation strategy that helps achieve long-term goals. Here's how three Inc. 500 companies do it.
National Patient Care Systems, a medical supplier in South Hackensack, N.J., pays the sales manager 70% of his income needs as base salary, so he won't get complacent. To emphasize growth, CEO Glenn Edwards adds 0.1% of gross revenues up to the previous year's revenues and 0.2% of sales that exceed that figure.
Shane Jones of Ace Personnel, a $7.3-million staffing service in Overland Park, Kans., admits that his sales manager's base salary is below the industry average, but says, "I ask employees to take some risk." The rewards for risk include annual profit sharing (of which the manager will get about $3,500) and a monthly commission consisting of 2% of gross margins. She's also eligible for a $4,500 quarterly bonus pool that is divvied up among the company's 27 employees.
Shiraz Balolia of Woodstock International, a $6.5-million manufacturer of woodworking accessories in Bellingham, Wash., paid the sales manager above-average base pay, plus a bonus for making the Inc. 500 list of the nation's fastest-growing private companies. After making the list with $4.2 million in 1995 revenues, Balolia paid his sales manager an additional 20% over his base salary.