Compensation

So I went to the Penn State vs. Michigan State football game and got to sit four rows from the top.  I could see how during the fall season, this was the best view in the house, especially for night games.  However, when the temperature is in the 20s with a wind chill, its not the most pleasant experience.  Continuing to try to learn more about sales management, I got to sit next to my friend's dad Ron, who owns an international moving company.  I've known Ron for a while and he knows his business inside and out because he started in the sales function before he went out on his own.  One of the items we discussed were the compensation and hiring issues revolving around managing sales people.

One of the greatest challenges he is currently facing is that because the last few years were so busy for his international moving business, he didn't make any attempts to hire sales people.  Unfortunately, with the economy heading in a downward spiral now, finding sales people that can go out and deliver results must be reconsidered.  Another issue he is having is the fact that a large portion of his customer base was AIG, Lehman, Merrill Lynch, and a few other financial companies.  With these firms going under and having shotgun marriages, not hiring any sales personnel in the past few years is beginning to hurt with finding new business.

One of the more interesting tidbits I garnered from my discussions with Ron were how he manages expense accounts and benefits.  The book states that there are three ways to manage expense reimbursement for sales personnel - unlimited plans, per diem plans, and limited repayment plans.  Ron however uses an entirely different plan which he learned from his days as a sales man.  The way his company manages per diem expenses is by allocating a percentage of sales rep pay to per diem expenses and then reducing the balance every time the sales rep travels.  Assuming a sales rep has a salary plus a bonus, a portion of the salary would be their travel related expenditures.  This way, the sales rep knows how much they will have in their fund for meals, hotels, and client entertainment and will then use their own judgement when making decisions based on their spending.  In summary, one of the most important parts of managing sales people is goal alignment.  When goals are aligned, the motives and purchases of sales personnel are in line with using the company's money in an economical manner.