Don’t compare apples to oranges. Make sure that the compensation plan is tied fairly to the realities and potential of the assigned territory. Make sure that the plan is based on accurate and current data.Sales personnel should not be punished for problems created by other departments (for example, manufacturing, quality control, shipping, service, purchasing, etc.). When sales are down, it may not be the salesperson’s fault. Carefully consider the impact of competition, economy, markets and customers, internal and external resources, etc., when evaluating performance.

Each salesperson should receive, discuss with the sales manager, sign, and return his or her annual compensation plan listing potential for salary, commission, bonus, expense reimbursement, and benefits. I am not talking about getting around to it in March or May. Do it before the previous year ends. This prevents misunderstandings and allows the sales manager and salesperson to discuss their total expense and how it relates to the revenue and margins brought in by the salesperson.