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Paying Your Sales Staff – Should You Offer Salary or Incentive?

Posted on in Pay Laws

Arlington Heights small business attorneys, paying your sales staff,Running a small business is no easy task; not only do you need to offer a unique product or service, abide by all tax laws, and cover the cost of your overhead, but you must also ensure your employees are happy. To accomplish that, you need to know how to pay them. In regards to sales staff, there are two types of compensation: salary and incentive. Which one is right or your small business? The following information may help you decide.

Laws May Dictate Your Decision

While, ideally, you want to offer a compensation package that offers employees incentive without breaking your budget, there are guidelines that must be adhered to under the law. Depending on your business and location, these laws may dictate the type of compensation you can offer. At the very least, the laws will need to be considered. As such, employers should ensure they have a firm understanding of all applicable labor laws.

Salary versus Incentive

Incentive pay—or the offering of bonuses or commission based upon sales amounts—can encourage sales employees to do their best. It is also more flexible than salary pay and gives employees more control over the amount they earn. However, incentive pay does have some notable downfalls. For example, sales incentives that do not offer value to the employee (such as in situations in which employees may make only a few sales each week or month) could lead to frustration and burnout. Further, some employees may prefer knowing what they will make each pay period. In these situations, you may want to consider a salary pay scale.

Combing Salary with Bonus Incentives

While most employers assume they can only offer either salary or incentive pay, some recognize that there are benefits to offering both. For example, you may offer your sales employees a base salary with the ability to make additional bonuses for exceptional performance. However, you should be aware that there are some risks involved, particularly for companies still in their infancy. Failure to carefully consider if you can cover the cost of both salary and incentive may land you in some financial trouble.

Our Arlington Heights Small Business Attorneys Can Help

At A. Traub & Associates, we understand the challenges of small businesses because we are one. Dedicated to your company’s best interest, we will carefully evaluate your situation and offer tailored advice to suit your needs. Learn more about how we can assist your company. Call 847-749-4182 and schedule a consultation with our Arlington Heights small business attorneys today.


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