Sales Compensation (Part II)--Bread and Circuses

"If we look at the priorities and motivations of a salesperson paid this way as opposed to the motives of the company paying on this basis, there are contradictions," says Sid Chadwick, president of Chadwick Consulting, in Lewisville, NC. With this type of plan, sales reps look to maximize revenues, regardless of long-term margins. The company, in paying this way, appears to want to reduce the cost of sales expense to match its revenue stream. This is a quantitative approach rather than a qualitative approach. "That also may not support loyalty between sales force and ownership/management," he suggests.