Boss cut your pay? Wondering what to do? Plenty!

by

Published: April 25,2005

Jeffrey,

I need your help. The other day I had my annual review and learned that I would be receiving a grade-level promotion, which is a big deal at my company. Last year about this time, my manager said that if my performance was exceptional, I would receive a grade-level promotion between 7% and 10% of my salary. However, I learned that my increase will be between 3% and 5%, even though my performance ranking is in the top 10% of a company with over 10,000 employees. Needless to say, I am disappointed, but I failed to speak up.

While I realize that I missed the opportunity to ask why I did not receive greater compensation, I am turning to you for advice. I know that conversations about compensation can be awkward, and I don’t want to create a problem with my manager. I’m not sure what to say or do. Any assistance from you is greatly appreciated. Thank you for your consideration and for making the Sales Bible a great resource!

— Scott

Dear Scott (and Every Employer in the World),

In sales the philosophy is: You are paid for your performance. “Salaried salesperson” is an oxymoron. In 1946 the late, great Red Motley said, “Nothing happens until a sale is made.” But you’d never know that when it comes to compensating salespeople.

In my experience, about two out of 10 companies compensate their salespeople fairly and consistently. The other eight are somewhere between unfair and scurrilous.

Over the years, hundreds of salespeople have written to me with their sad tales of territory cuts, pay cuts, compensation changes and arbitrary “revisions” in pay plans-all of which result in some form of lower payment to the salesperson for the same (or more) work.

Besides no commission for renewal sales, other negative changes include…creating house accounts, lowering rates of commission, withdrawing previously promised compensation and other senseless business practices. Unfortunately, these business practices result in…

• Disgruntled salespeople.

• Unmotivated salespeople.

• Salespeople looking for other jobs.

• Salespeople grumbling to everyone about the company they work for.

• Loss of corporate morale.

• Fewer sales.

• Less profit.

• Making the corporation they work for look like a bunch of greedy pigs.

Now let me tell you how I really feel. In my family, my parents taught me that if you make a promise to someone, you keep it — the same in business. If some corporate bigwig is looking to add profits so he can “increase shareholder value,” let him cut his own pay and give back the “golden handcuff” deal.

Salespeople, like other paid employees, count their money — every penny of it. They make plans based on their compensation: plans to buy a house, plans to buy a car, plans to take a vacation and plans to put their kids through college.

Corporations make plans to reduce the pay of salespeople because they think “salespeople make too much money.” This could be the single dumbest business philosophy of all time.

I have salespeople, and I want all of them to make $1 million this year. In fact, in my company, we don’t have sales quotas; we have earnings quotas. Our salespeople must earn minimum amounts of money or look somewhere else to find success.

Once the financial people decide what sales compensation should be, they need to stand by it and add to it. If they want to reduce someone’s pay, they should start with their own.
The minute your company cuts your pay or cuts your territory, or in some way goes back on its word about your financial remuneration, quit. Go work for the competition.

Many salespeople have signed a non-compete agreement. When asked to sign one, I recommend that salespeople add this sentence: “If you ever cut my pay, or restructure my present compensation to where I am making less for the same effort, this non-compete is invalid, and I can leave on my own free will and work anywhere.”

Personally, the only non-compete I would sign is one that prohibits me from taking the company’s customers. In other words, I’m free to go, but I can’t take anyone from my present company. That’s a fair non-compete.

Salespeople go out into the marketplace and take the financial risk that comes with the sales profession. They develop a special set of skills that traditionally have been well compensated. The companies that compensate their salespeople in a fair and proper manner are the most profitable. I wonder if that’s a coincidence.

There’s no easy answer to this dilemma of fair compensation. It will continue to be a dilemma for two reasons: (1) compensation is tied to a company’s greed; (2) and the people making decisions about compensation are typically not salespeople or sales-minded people.

Compensation decisions are made by people with no knowledge or understanding of sales. (They probably couldn’t make a sale if their lives depended on it.)

And so my fellow warriors, I challenge you to stand up for what you deserve. And if you don’t get what you want where you are, seek higher ground.

GitBit: If you want the positive side, what does motivate a salesperson, and what will keep them loyal, go to www.gitomer.com — register if you’re a first time user — and enter MOTIVATE in the GitBit box.

Jeffrey Gitomer, author of “The Sales Bible,” and “Customer Satisfaction is Worthless, Customer Loyalty is Priceless,” is president of Charlotte-based Buy Gitomer. He gives seminars, runs annual sales meetings and conducts training programs on selling and customer service. He can be reached at (704) 333-1112 or e-mail
salesman@gitomer.com.

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