What Should You Be Paying? (Continued)

So after last week’s blog post, some of my lovely readers in sales approached me offline with some follow-up questions. A common inquiry regarding compensation plans for sales people at expansion stage startups was ‘well if someone is clearly a rock star, why wouldn’t you pay them a base salary beyond the 75th percentile? Won’t you risk losing them at the offer stage otherwise?’

My answer is ‘yes and no’. If the candidate feels they deserve more and a negotiation has begun, suggest something else: an even lower base (stay with me now) but a higher percentage of closed sales, resulting in a higher Total Cash Compensation (TCC). If this person really is the rock star they claim to be, then they would love this arrangement. Commissions matter and for awesome sales people, why wouldn’t you want a higher (or even non-existent) ceiling? If you’re killing it day in and day out, would you want to limit your earnings? Of course not!

Everyone wins in this scenario. As an expansion stage startup, you don’t have to “front” too much money (you’re scaling a business after all) to hire and your newest member ends up making the moolah he/she deserves. If the sales candidate is not enthused by this proposed compensation plan, then it could mean he/she doesn’t really believe in your product and/or he/she just really isn’t that good at selling and anticipates future earnings to be grim. Either of those reasons should warrant a rejection letter.

Thanks for the questions and follow-up. Please keep them coming!

Vic