Friends,
I have a question regarding salaries and increment system.
We run a multiproduct trading company in exports. In our company we employ several sales person – Monthly Salary Range Rs. 35000 to Rs. 75000. Besides this, they get an annual performance bonus ranging from 1 - 8 lacs per person which is a direct proportion to his sales in his area.
Their job profiles remain unchanged year on year. The company structure is usually quite flat so they all continue to report to the Head of sales. The products they are selling, payment terms, profit margins and areas of operations also remain more or less similar every year. They do have sufficient opportunity to increase their sales by adding new customers, areas and products if they are able to since we have a relatively small marketshare of the total space.
There is no restriction on capital employed or supply side. Ofcourse all sales have to be made for safe payment terms which is probably the only limiting factor in increasing sales.
The question I have is :
1. Should the sales person get an annual increment every year on his fixed salary besides whatever annual bonus he may get based on his sales ?
OR
2. He should be expected to get the growth in his salary by using growth in his sales and thereby increasing his annual bonus ?
I would appreciate frank views on this and can post a synopsis back on the group.
Regards,
Andy
From India, Ludhiana
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I have a question regarding salaries and increment system.
We run a multiproduct trading company in exports. In our company we employ several sales person – Monthly Salary Range Rs. 35000 to Rs. 75000. Besides this, they get an annual performance bonus ranging from 1 - 8 lacs per person which is a direct proportion to his sales in his area.
Their job profiles remain unchanged year on year. The company structure is usually quite flat so they all continue to report to the Head of sales. The products they are selling, payment terms, profit margins and areas of operations also remain more or less similar every year. They do have sufficient opportunity to increase their sales by adding new customers, areas and products if they are able to since we have a relatively small marketshare of the total space.
There is no restriction on capital employed or supply side. Ofcourse all sales have to be made for safe payment terms which is probably the only limiting factor in increasing sales.
The question I have is :
1. Should the sales person get an annual increment every year on his fixed salary besides whatever annual bonus he may get based on his sales ?
OR
2. He should be expected to get the growth in his salary by using growth in his sales and thereby increasing his annual bonus ?
I would appreciate frank views on this and can post a synopsis back on the group.
Regards,
Andy
From India, Ludhiana
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Dear Friend,
Since you have a sales team, of course, the entire team is selected from the market and their sales performance, past career must have been scrutinized. I hope your organization might have a fixed salary for that particular person/employee, attaching sales bonus and their area of operation. No salesperson may cross another's territory, and sanctum is safeguarded, as this will create a greater problem in showing their performance by intruding another's territory. Clearly, as an organization, they are reporting to the head of sales, and the head of sales maintains genuineness. When the sales go to the best, there will be no problem. What happens if the same dwindles? Further, it is not clear from your wording if the salesperson selected has a common fixed salary without increments. Do they remain/serve continuously is a question? How many salespersons have been serving for long years/say the period is longer than the sales head? Have you ever checked the sales and progress? These are your issues.
For the salesperson to remain attached with us, we should implement enhancing the salary every year that will remain an added career growth. There is no flat, as you said. They have to meet new customers, and they should be motivated for better performance; thus, certainly, their salary should be enhanced. Regarding sales bonuses, certainly, whenever they meet a new customer, their sales progress is projected, and their bonus increases. If they fail to meet a new customer, their bonus is not going to increase. The hidden fact is you are paying for the old sales, and the old customer is being treated as a new customer. Thus, the bonus is being regularly paid to the old customer, treating them as a new customer, or every sale is being regularly added for a bonus. You basically have the team concentrate on old customers.
In the absence of a clear policy, certainly, the projection leads to some anomalies. So, for better career opportunities and motivating the sales team, considering the enhancement of salary is good to proceed. The sales bonus is a separate case and depends upon old added with new customers.
Best of luck.
From India, Arcot
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177Since you have a sales team, of course, the entire team is selected from the market and their sales performance, past career must have been scrutinized. I hope your organization might have a fixed salary for that particular person/employee, attaching sales bonus and their area of operation. No salesperson may cross another's territory, and sanctum is safeguarded, as this will create a greater problem in showing their performance by intruding another's territory. Clearly, as an organization, they are reporting to the head of sales, and the head of sales maintains genuineness. When the sales go to the best, there will be no problem. What happens if the same dwindles? Further, it is not clear from your wording if the salesperson selected has a common fixed salary without increments. Do they remain/serve continuously is a question? How many salespersons have been serving for long years/say the period is longer than the sales head? Have you ever checked the sales and progress? These are your issues.
For the salesperson to remain attached with us, we should implement enhancing the salary every year that will remain an added career growth. There is no flat, as you said. They have to meet new customers, and they should be motivated for better performance; thus, certainly, their salary should be enhanced. Regarding sales bonuses, certainly, whenever they meet a new customer, their sales progress is projected, and their bonus increases. If they fail to meet a new customer, their bonus is not going to increase. The hidden fact is you are paying for the old sales, and the old customer is being treated as a new customer. Thus, the bonus is being regularly paid to the old customer, treating them as a new customer, or every sale is being regularly added for a bonus. You basically have the team concentrate on old customers.
In the absence of a clear policy, certainly, the projection leads to some anomalies. So, for better career opportunities and motivating the sales team, considering the enhancement of salary is good to proceed. The sales bonus is a separate case and depends upon old added with new customers.
Best of luck.
From India, Arcot
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