Sales Compensation

"Everything you do in sales compensation should have a goal," says Marion McGovern, CEO of M 2 Inc., a $10-million San Francisco broker of consultants. McGovern revised her sales-pay plan last year--and her advice holds true whether you're designing your first sales-pay plan or your tenth. Nothing will anger your sales force like carelessly mucking around with their pay. To help you avoid problems, we've assembled a guide to selected sales-compensation resources. Each one is rated on a scale ranging from five stars (we love it) to zero stars (we hate it).


The Sales Compensation Handbook, Second Edition
This volume (from Amacom, 800-538-4761, 1998, $75), edited by Stockton B. Colt, is certainly ambitious but should have been much more tightly organized and edited. In its favor, the Handbook, which was due in stores in August, does a thorough job covering the changing complexities of the sales game and the way those wrinkles can affect pay. This book devotes a whole chapter to team selling, for example. Great use of charts, too. ***1/2

10 Steps to Improve Your Sales Compensation Plan
A good freebie, this quick review by sales-compensation consultant Brad Brown can be found on-line at It's basic but useful. ***


The First Ten Questions
To help people avoid common pitfalls, compensation consultant Dan Kleinman wrote this free one-page handout. (To request a copy, please visit The list gets you thinking about the larger management issues swirling around sales pay. First question: "How comprehensive is the sales staff's sense of the economics driving the business?" ****

Designing Sales Compensation Plans: An Approach to Developing and Implementing Incentive Plans for Salespeople
Jerome A. Coletti and David J. Cichelli, two well-known sales-compensation consultants, have written a booklet (from American Compensation Association, 602-922-2020, 1996, $24.95 plus shipping and handling) that packs a breathtaking amount into 24 pages. The presentation may be too advanced for beginners, but if you know a thing or two about sales pay, you'll appreciate the technical details as well as the directness of such sample forms as the plan-costing worksheet and the plan-announcement letter. ****

Complete Guide to Sales Force Compensation: How to Plan Salaries, Commissions, Bonuses, Quotas...Everything Needed to Achieve Top Sales Results
This book, by James F. Carey, is thorough and concise and great for beginners. Unfortunately, it's also out of print and hard to find. (Published by Richard D. Irwin in 1992, the book is currently available from Carey Associates for $35; call 650-347-3633.) The author takes you step-by-step through the process of developing a sales-compensation plan, from defining sales goals to launching the new pay plan. He wisely advises against letting a lawyer rewrite the pay-plan document (although you'll want to have one look it over). Chapter 10 delves into the sticky realm of "windfall sales," or sudden, unexpected surges in sales that prompt some companies to cap commissions after the fact, a move that can cause problems. ****

What America's Small Companies Pay Their Sales Forces...and How They Make It Pay Off
The Dartnell Corp. has surveyed nearly 300 small companies (with less than $5 million in sales) about how, and how much, they pay their sales staff--from entry-level reps to sales managers. Christen P. Heide summarizes the results in this volume (from Dartnell, 800-621-5463, 1997, $39.95 plus shipping and handling). This is a statistical snapshot you just can't get anywhere else. The downside: the data are based on 1996 levels. So don't peg anyone's salary or bonuses to these data, but do take note of the trends. For example, the average compensation scheme worked out to roughly half salary, half incentive pay. The book also includes instructional chapters on related subjects such as "quota-setting basics." ***1/2 --Susan Greco