Undervalued, Underpaid: Sales Jobs Offering Base Salary And Commission?!

Oh, this money? Well, you elected for the base salary + commission, right? I'll take this.

Aflac Inc., the supplemental insurance company, states that over 85% of the people they hire as Agents do not come from a sales/marketing background. Most likely if an Agent did not come from that world, it was likely they came from an environment where they received a salary…or were paid hourly. Aflac Agents are paid 100% commission based on their sales efforts.

Why would someone leave the safe confines of a salaried/hourly position to work on a commission basis?

Well, for one reason, there is an industry-wide change in technology. Many of the prominent fields of the 1970′s and 1980′s have either been replaced by technological advances in manufacturing or automation, outsourced to other countries, or outsourced to other business service companies.

Basically, the idea of completing a 4 year college and landing a cushy, salaried position with a corner office overlooking the business district have become extinct. And the reality is, if you want to earn a good living for your family, that resembles anything like the American Dream, you better sell something!

As a Regional Director of Recruiting (speaking of myself) for a major corporation as well as someone who owns a small staffing firm that places Sales Professionals, it’s obvious that many smart, hard-working people do not understand commission structures and how this impacts their bottom line — their paycheck!

Many employees, if they really looked at their own personal contribution to a corporation, would see that they are consistently undervalued and underpaid — but still remain loyal to the base salary structure. (???) It’s puzzling.

In this article, we’re going to look at some of the clever methods that companies use to bait salespeople and how even with an element of “uncapped earnings,” you can still be taken advantage of.

Types of Commission Structures

1] Draw Against Commission — Many years ago, after I left 9 years of service with the U.S. Navy, I met a car salesman who invited me to come to an Open House his car dealership (Ford) was having for salespeople. 2 weeks later, I was on their lot selling cars. At first, I was successful. I was selling 4-5 cars a week. About 4 months later, I couldn’t sell anything. And that $325 a week draw I was receiving, was starting to add up.

Every week I was in the hole for another $325. That draw was merely a “loan” that I had to pay back. It didn’t take to long for me to realize that I had to move on. I was digging myself a ditch that I would never crawl out from.

*The auto sales industry is pretty up front with their compensation structure. But, be careful that the base salary the organization outside of this industry is offering is not technically a draw as well.

2] Salary Plus Bonus — Not too long ago, I was working as an Onsite Recruitier for a staffing company. Companies that utilize many “temps” from a staffing firm will want to have a representative working on their premises to handle recruiting, onboarding, coaching/counseling, safety, maintaining morale, handling payroll discrepancies, attendance issues, etc. Having to call the Branch for every incident would be too time-consuming.

I was paid a base salary but also had the opportunity to be paid a bonus if I beat my sales projections. Exceeding the sales quota for my account meant I was receiving an additional 10-15% on top of my base salary. I liked this because it provided a monetary incentive to be my best.

Not everyone in the same role performs in the same manner. Salary-only positions punish those who excel on their jobs, while the under-achievers are rewarded. Same as in a union environment where the “merit system” of paying better quality workers is non-existent. Everyone makes the same amount as agreed by the Union agreement.

3] Salaried Sales — Yes, some salespeople are being paid straight salaries for their sales efforts. Can you see how over-achievement can be abused here? The company which should be passing down commissions for the salesperson’s efforts are pocketing the difference.

3] Base Salary + Commission

The concept of a base salary + commission sounds attractive. Despite your sales efforts, you are guaranteed a salary.

While the concept of a “base salary” sounds good in theory, in reality, it serves to devalue your sales contribution — meaning the difference between making $45k a year and $150k annually as a Sales Rep.  Any money a company is paying you outside of your sales efforts, the expectation for you to produce within your first few weeks is suffocating…and you probably wouldn’t feel comfortable working there under all that pressure. Would you?

NO ONE is going to pay a salesperson a base salary who doesn’t sell. So, the idea of a “base salary” is a gimmick that recruiters use to entice salespeople.

4] 100% Commission

There are no restraints here. And if you work for a company in insurance, say Aflac, you will receive a  large, up-front commission, the rest in monthly commissions throughout the year, and ongoing commissions from annual renewals (Residuals). How many people can say they are making money from what they did 5-10 years ago?

There is no “safety net” for sales people. If you don’t sell, you don’t stay around too long. But if you are going to sell, at least put yourself in a position to have the highest percentage of the profits passed on to you.

In Closing

All the creative methods involving salaries, base commissions, and draws won’t prevent the inevitable. It’s the industries way of “weeding out” the underachievers. If you work in/around sales, you already know it’s the type of business where defeat comes with an enormous psychological consequence.

In the back of everyone’s mind, they believe they could sell…anything. As long as they don’t have to!

Many “seasoned sales professionals” walking around with embellished sales backgrounds on their resume quickly crumble when they start working for a new employer.

And a lot of has to do with cold-calling.

What are your thoughts on sales positions? What compensation structure works best? Would you work in a 100% commissioned environment?

Is making $34k a year salary enough for you as a support staff for accounting, HR, administration, and financial services? The sad reality is often going back to school means you are a highly educated person…still making $34k a year!

Middle class opportunities in management are becoming fewer and fewer. Many of you who either have to make more or want to make more may have to consider a career in sales.

Are you ready for that?

Now What?

Will An Employer Hire Someone With Misdemeanor Convictions In Their Background?

How Frightened Are You At The Concept of Cold Calling? Why?

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10 Reasons Why People With A Master’s Degree Apply For 35K-A-Year Jobs (and Get Rejected!)