Discuss paying a straight salary to salespeople. When is it appropriate and what are the advantages and disadvantages for salespeople and the company?
Solution:
Paying a straight salary to salespeople has been out of fashion in the business world. This method can be applied for only a certain type of salespeople who are selling a certain type of product. This can be applicable for products that are sold over stages and rounds of negotiation, in such a scenario a straight salary to the salesperson makes sense however it does not make sense to pay straight salary to people who are selling FMCG products. This is why paying a straight salary to the salesperson depends heavily on the type of product sold.
Straight salary for salespeople will be appropriate when dealing with accounts. This is the scenario where a single personwill handle a company account as an account manager and handle all the salesthat come through that account. This is applicable when fixed sales are going to come from some of your huge customers and it is needed to have salespeople to facilitate all the sales in this account. This is a case where managing sales is more important than actual selling. Hence, the straight salary pay will be more applicable in this case.
Straight salary to salespeople in any company will be a bad thing for business. This is because salespeople will become complacent with their straight pay. having a variable pay will motivate them to sell more and bring mor ebusiness to the company. HEnce, this is why companies should pay salespeople in variable pay.
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