The Agony and the Ecstasy of Commission-based Pay

By Stefan Schumacher, editor of The Payroll Blog

The potential appeal of commissioned employees is obvious to small business owners in that it can motivate employees to work harder to achieve sales or performances goals.

At the same time, depending on the commission type (e.g. straight commission), an Outside Sales employee only gets paid if he is making sales. This protects the business owner from having to continually pay at times when sales revenue may be down.

However, it may be difficult to find Outside Sales Employees who will work on a commission-only basis. When offering a salary plus commission position, the small business owner needs to strike a balance between offering the employee some financial stability, while at the same time providing an appealing commission rate to provide enough incentive for the employee to see the value of maximizing their sales potential.

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