Earlier quoted context omitted.
Also personality. Good salespeople are... Good salespeople. They apply their craft when negotiating compensation. What am I going to do, make a single page app about why I should be paid more? ...actually that's not a bad idea.
Depending on who you are pitching, it might turn out something like http://getcoleman.com/
Why Must You Pay Sales People Commissions?
211–220 of 327 posts
Re: Why Must You Pay Sales People Commissions?
#212Earlier quoted context omitted.
I've come across a number of products that sell themselves because they've solved a problem I was having. A lot of these went on to unsell themselves with things like "contact us for pricing". A sales team might be better at maximizing sales, but that isn't necessarily a good thing. One that's bucked this trend lately has been atlassian, they're a 5 billion dollar company without a sales team that operates in a space…
> One that's bucked this trend lately has been atlassian, they're a 5 billion dollar company without a sales team that operates in a space that typically requires sales teams. Transparent pricing is a huge part of their success. I heard they have a huge partner/reseller network though
They also hire for lots of sales roles which don't have sales in the title
https://www.smartrecruiters.com/Atlassian/743999657351399
Re: Why Must You Pay Sales People Commissions?
#213Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…
> the sales person knows exactly how much money they bring in I agree this is the key factor. Any job where a person can argue a clear, direct, measurable link between their work and profit is a job that can be paid based on financial results. Other jobs where you see this: financial traders, consultants with direct client contact. To take the other extreme, look at teachers. They have the potential to generate huge…
Quite often what/how the engineers do is irrelevant really but without the sale nothing happens. Look at MSFT - crappy software but would love the commission.
I'm sure some junior sales people would love a fat base but if you are any good the results-based reward incentive thing benefits both parties.
If it made sense to charge by the line of code then engineers would too (line necessarily being a good surrogate for value added).
Personally I think salary is slavery.
Re: Why Must You Pay Sales People Commissions?
#214Well you have commissions or stock options. I think you get one or the other. Then again the best sales people probably get both.
Re: Why Must You Pay Sales People Commissions?
#215Earlier quoted context omitted.
> Unfortunately the effects of a single teacher are so noisy and indirect that it's basically impossible to measure their performance. The lack of firm data is why the debate about teacher compensation is so fraught. The problem is not that it's hard to measure. The people is that teachers actually have very little ability to make a marginal impact on their students though their performance, except at the very tail e…
> The problem is not that it's hard to measure. The people is that teachers actually have very little ability to make a marginal impact on their students though their performance, except at the very tail ends of the distribution. That's essentially true for most sales people and traders as well. There are VERY heavy tails -- that one guy at the car dealership who sells 3x as much as his peers, or the trader at Citade…
But as in the UK teachers would game the system eg by having "difficult" kids in this case those of only average intelligence excluded from the school to make their position in the league tables look good.
Re: Why Must You Pay Sales People Commissions?
#216I'd rather have a sales person that is as much a part of the team as anyone else. Daniel Pink's ["To Sell Is Human"]( http://www.danpink.com/books/to-sell-is-human/ ) makes a strong argument against commissions, which is echoed in these articles: https://hbr.org/2012/07/a-radical-prescription-for-sales > Mitch Little began questioning the received wisdom on sales commissions in the late 1990s, shortly before he becam…
The Fog Creek link is 404: https://blog.fogcreek.com/why-do-we-pay-sales-commissions/
Re: Why Must You Pay Sales People Commissions?
#217Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…
Getting commissions does not necessarily mean getting paid more. Often people paid on commissions have smaller base salaries.
Payments with commissions are a managerial tool to incentivize a certain behavior, the same way there are other structures to help organizations behave in a certain way.
For example, you can incentivize people based on an easily measurable metric fully under their control (e.g. $ sales, customer support tickets solved, factory throughput, etc.), or choose to align everyone's behavior (e.g. Profits of xyz division of the company - hardly under a particular person's control).
That's the same principle behind giving CEO and other senior executives incentives based on stock options: you want them to create value and get share price up, while leaving them maximum freedom on how to get there.
Each approach has its pros and cons in terms of how easy it is to explain to employees, track the metrics, create a collaborative environment (or not), incentivize intra-company communications (or not), and the impact it has on workforce productivity (also, it depends on how you measure productivity...)
In designing an incentive plan, one has to decide which one of these factors one wants to prioritize.
Because of the salesperson role, and because of the type of mindset/profile these people predominantly have, it is easy/common to have their pay structure heavily based on commissions.
Looking at things from the other side: if you ask a salesperson about compensation structures, possibly she would be wondering why engineers' or designers' pay is not linked to sales, so (instead of working on interesting and beautiful stuff) they would prioritize shipping features that help her sell... (as an example of not so beautiful designs that sell more think about the design of certain low cost airlines websites) ...Then again, possibly, the salesperson only knows what would help her sell more easily TODAY, and not what she is going to need in a year's time... you need an engineer not directly incentivized on current sales to think about that!
Re: Why Must You Pay Sales People Commissions?
#218Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…
Well, yes and no. I have seen "sales" types get accounts handed to them, after which they are essentially collecting rent. If their protectors are sufficiently powerful, this can continue indefinitely.
Re: Why Must You Pay Sales People Commissions?
#219I wonder what an org would look like where engineers got compensated as well as salespeople--as a percentage of sales, where if you made a great product that sold like gangbusters, you got showered with money, but if it doesn't sell you get very little or fired. I bet at the very least the products would look very, very different.
You could make the argument that in (growing) startups, this is closer to the way things are- engineers create value over longer time periods (and efforts are often harder to tie directly to economic value creation). Equity-based comp is a good way to compensate for these kinds of efforts.
Re: Why Must You Pay Sales People Commissions?
#220Earlier quoted context omitted.
As an engineer, the way you get paid for the value you create is by starting a company. In fact, that's the way you do it in pretty much every profession. The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.
The difference between an underpaid processor designer and Intel is a billion dollar fabrication process.
Intel only started with a few million. https://en.wikipedia.org/wiki/Intel#Origins