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Remuneration Plans - Things to remember when devising Compensation Plans for your sales team



Features of a Good Sales Compensation Plan

In every organisation, it is the duty of a sales manager to get the best results from their sales executives. To motivate employees, organizations use a number of different tools, some financial while others non-financial in nature.


All these tools put together constitute a Sales Compensation Plan. Elements of a Sales Compensation plan can be classified into - Fixed, Variable / Incentive based, Expense Allowance / Reimbursement & Fringe Benefits.

Requirements of a Good Sales Compensation Plan

  • Secure Income - The plan should provide a living wage preferably in the form of a secure income.

  • Fit with the overall scheme of things - The Compensation plan should fit in with the organization's overall motivational programme. There should not be any conflict between other motivational factors such as the intangible feeling of belonging with the overall sales team.

  • Fair - Plan should be based on equal pay for equal work (performance).  Sales personnel should not be penalised for factors beyond their control.

  • Simplicity - A compensation plan should be simple to understand and follow so that Sales Executives can calculate their own earnings.


  • Adjustments - A sales compensation plan should adjust to changes in performance, as and when that happens.

  • Economical - Lastly, the compensation plan should be economical to administer and should support the overall objectives of an organisation.

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