Hiring, Motivating, and Retaining Good Salespeople
Jim Shine had some big problems on his hands as the owner and sales manager of Pacific Medical Supply Company. Jim's problems involved his most junior salesperson, Nicole Landis. Nicole's impact on Pacific Medical Supply's sales was huge, despite the fact that the company hired her right out of college. The specific problems Jim faced as a result of Nicole's extraordinary sales efforts involved professional jealousy among his sales staff, the discovery of an out-of-whack sales commission structure, and a customer service department that was tired of being dumped on by the salesperson they nicknamed the "Land Shark." The company's sales commission structure is as follows:
Pacific Medical Supply Company pays a commission on customer orders based on the tiered commission rates shown in Table 1.
Table 1 Pacific Medical Supply Company Sales Commission Rates
Sales per Month
% of Sales
Less than $100,000
$100,001 to $200,000
$200,001 to $300,000
$300,001 to $400,000
$400,001 to $500,000
Example: Monthly sales of $120,000 would result in a monthly commission of $10,500.00 ($100,000 X .085 + $20,000 X .10). This commission level, if sustained, would equate to $126,000 in annual income. Note: If all the orders were new business, $1,200 per month or $14,400 per year would be added to the salesperson's commission. Commissions are paid on each month's sales orders by the 5th day of the following month. One percentage point is added to new business for a term of 12 months. New business is defined as an account that has not placed an order with Pacific Medical Supply for a two-year period.
If an order is placed by one account and the product ships to an account of another salesperson, the commission is split 50/50 between the two salespeople. A guaranteed draw on commission will be granted for salespeople who are working their first two