Sales Management Compensation
A sales manager's compensation package is similar to that of a salesperson in many respects. Some sales managers are just paid a salary, but the vast majority receive some monetary incentive. This incentive can take several forms - the most common of which are an override on all sales in his/her region of responsibility and a performance bonus.
The override is usually a far smaller percentage of revenue than that paid to the salesperson. The sum total of the manager's commission revenue (from all the reporting salespeople) should approximate a compensation figure, that when combined with the manager's salary, equals what the employer has budgeted for this position (see Sample Sales Commission Plan calculations). Again, this override commission should be paid monthly.
The bonus can be structured in one of several ways. Most common are growth and profitability bonuses. Bonuses are typically paid quarterly or at year's end. The bonus formula is usually known to the manager. A year-end bonus is often predicated on the overall company performance. Monies that go into a shared bonus pool are not determined until after the corporate financial books are closed at the conclusion of the fiscal year.
As a rule, the simpler the program the better. However, it is common practice to have up to 4 components within a single program. Each component can be weighted based upon priorities and contribution value.
For assistance with your sales management compensation programs, contact Joe Rahal from our Contact page