All compensation systems involve a series of complex tradeoffs. How much of the compensation should be fixed and how much variable? Should it reward revenues, profit margins, or both? How will it weigh mature products against new ones? How will it encourage salespeople to stretch for incremental dollars once they have hit their quotas? The right answers to these questions will balance the salesperson’s primary concern (“Is my return worth the effort I put out?”) with the company’s performance, its strategic and financial goals, and the value it offers its customers.
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