Once upon a time, determining sales pay was merely a matter of following the industry standard. Today smart CEOs are tailoring pay to the salesperson and to the company's strategic goals. Unfortunately, though, there are no quick fixes; changing any pay system takes time -- and planning.
What are the alternatives to traditional commission systems? Strategic Pay, by Edward Lawler (Jossey-Bass, 415-433-1767, 1990, $28.95), lays out the options, from the many variations on pay for performance, to profit sharing, gain sharing, and stock-option plans. And the book provides much more context than what you'd get in a tome limited to sales pay.
The emphasis in Strategic Pay is squarely on the big picture. The chapters on setting compensation levels and determining the compensation mix encourage managers to think about pay in relation to business strategy, management style, corporate culture (a company of solo performers or team efforts?), and employee-performance measures.
The chapter on paying for "organizational performance' will help CEOs figure out how to compensate a variety of employees who are important to sales and customer satisfaction. The section on performance appraisals will come in handy for anyone redesigning the roles of sales and support people.
Salespeople in particular don't take kindly to someone "messing' with their pay, and chapter 12 contains sound advice on getting employees involved in the change process. The case studies at the end of Strategic Pay illustrate how to mix and match the pay options presented.* * *