The company's allocation system reform is quietly underway, and the "big pot rice" principle has been replaced by an individual competitiveness system. Especially in the sales department, employees' income levels are influenced by their personal work performance and achievements. However, why does the frequent job-hopping phenomenon still persist? It is clear that a common human resources compensation design cannot fully and effectively motivate the enthusiasm of salespeople. The company needs an effective salary model to encourage employees to challenge themselves.
Daming Technology is a small company with over 30 people, engaged in the sale of office automation products. Originally, the company had 15 sales personnel. Like other companies, Daming Technology also adopted a base salary plus commission compensation model. The boss was quite amicable towards the employees, and they could get along well with each other. However, inexplicably, there were still cases of job-hopping. Many salespeople who had previously performed well just left without notice. The frequent turnover of staff caused a decline in sales performance. Additionally, it was discovered that some salespeople were working part-time at other companies, focusing more on their external commitments than their primary responsibilities. What originally took three days now takes five. This situation troubled the boss immensely.
Daming’s sales personnel vary in ability and background. Similar to many companies, here too exists the 20/80 phenomenon: 20% of the sales personnel account for 80% of the sales department's total revenue, and it is precisely this 20% of the main sales force that tends to leave. For a time, the company became a regular visitor at talent market recruitment fairs. Many sales plans were shelved or forced to stop due to personnel turnover, which hindered Daming's growth momentum due to internal factors. This phenomenon occurs in many small and medium-sized enterprises, where salespeople frequently come and go, making recruitment a daily task for the company. However, newly recruited salespeople continue to come and go in batches, with very few staying longer than half a year, leaving everyone puzzled. But what exactly is the key issue? Is it an unreasonable allocation system that fails to motivate employee enthusiasm, or are there other reasons?
Understanding the crux of the matter
To uncover the truth, the company owner reluctantly interviewed some of the already departed salespeople and found two details, but these were also fatal flaws. First, they felt that the base salaries were unequal. Daming Company, like others, overly scientifically required educational qualifications when selecting sales personnel and designed different base salaries based on the educational level of the hired salespeople. The breakdown was roughly as follows:
1. Salespeople who have just graduated from college with a marketing major have a basic monthly salary of 900 yuan.
2. Salespeople with relevant work experience but not a marketing major and holding a college degree have a basic monthly salary of 800 yuan.
3. Salespeople with certain work experience and starting with a secondary vocational school diploma have a basic monthly salary of 600 yuan.
From the above, we can see that the basic monthly salary of salespeople with secondary vocational school diplomas and certain work experience is 300 yuan less than those who have just graduated from a marketing major. Due to the fierce competition in the office automation product sales market in the city where Daming is located, profit margins are low. For a deal worth tens of thousands, the profit may only be 2000-3000 yuan. According to Daming's current business commission standards, the commission for the main salesperson is only 500-600 yuan more than a newcomer. With the existence of graded base salaries, after calculation, the monthly income of the main salesperson is only about 300 yuan more than a newcomer, while their sales volume must be much higher to maintain this income level.
Secondly, Daming Company does not have a good product mix, which hinders them from obtaining better contracts. Office automation equipment has strict agency systems, and it is difficult for small companies like Daming to obtain product agency rights. They can only become distributors for other agents. When customers need a wide variety of products, salespeople find it hard to meet all demands alone, leading them to take up part-time jobs to compensate for this deficiency. Otherwise, their sales volume would be hard to guarantee, and their income would naturally be affected. However, pulling one horse to pull two carts is incredibly labor-intensive. Salespeople aren't superhuman; they have no spare time to attend to family and other affairs, so they choose to jump ship to companies with more diversified product offerings. Clearly, this is the internal cause of frequent job-hopping among salespeople.
Daming's simulation of salary design led it into a misunderstanding, creating a sense of hierarchy in the salespeople's basic monthly salaries, destabilizing morale. Marketing majors with less experience earn 300 yuan more than experienced secondary vocational school graduates, yet the work content is identical. Moreover, there is no tiered design for commission ratios—whether selling 1000 yuan worth of goods or 100,000 yuan, the commission ratio remains the same. Anyone placed in such circumstances would feel psychological imbalance and lack loyalty to the company.
Many small business owners, due to limited management skills, rarely have their own thoughts in enterprise management, often blindly copying the models of larger companies, including compensation models. However, what they observe are merely surface-level practices of larger companies, which are not necessarily suitable for them to replicate. In fact, being small in scale and flexible in structure, encouraging salespeople through more effective compensation allocation is actually the advantage of small enterprises. For example, small enterprises in Wenzhou focus on the performance of salespeople rather than whether they hold university degrees. Similarly, the income of salespeople is determined by the proportion of sales targets they achieve, and they can choose products and regions they are skilled in to run the market. This way, earning commissions and bonuses becomes a reality.
From the above examples, it is evident that whether the design of salespeople's compensation is reasonable plays a crucial role in cultivating employee loyalty and enhancing the performance of the sales department.