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Rep Talk

Independent contractor or employee? Commission or draw? This five-step plan can help you decide how to pay your sales reps.

This story appears in the October 1998 issue of Entrepreneur. Subscribe »

From a salesperson's point of view, the best way to measure success is obvious: paid commissions. But as a business owner, if you don't carefully structure your compensation plan, you can not only end up making less than your sales team, but you may also risk going out of business.

Recently, I've been receiving letters from business owners who want me to address the issue of commission structures and fair compensation. So I interviewed owners and sales managers from various industries to find out what works best for them. Hopefully, this information will assist you in evaluating or creating your company's commission plan. Let's take it step by step.

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