David Wudyka discusses common commission pay plans in a BLR webinar entitled ‘Commission Pay Plans: How to Motivate Your Sales Staff in a Roller Coaster Economy’. He describes three common types or options of Commission Pay Plans (CPP) as follows:
- Option 1: Straight Salary Plans
- Option 2: Straight Commission Plans
- Option 3: Combination Plans
In the Straight Salary Plan, the sales representative earns a set amount of compensation based on hours or days worked. It is very simple to manage, especially for sales people who are asked to do lots of sales support functions such as market research or sales administration. However, there is no direct link between the sales representative's performance and reward. In the Straight Commission Plan, the sales agents only earn a commission based on their sales numbers or sales percentages. In the Combination Plan, sales agents earn both base salary that is not connected to commissions and a commission that is added to the base salary.
David Wudyka is the founder and managing principal of Westminster Associates (www.westminsterassociates.com), a Massachusetts-based human resource and compensation firm that specializes in pay, performance, and productivity issues. He brings more than 30 years of professional HR and compensation experience to the table for clients around the country.