NADA MONTHLY DEALER OPERATIONS COMMENTARY
[SIZE=3]Elements of a Good Pay Plan for Salespeople[/SIZE]The first objective of any pay plan is to determine what the total compensation should be for the position. How much do salespeople earn in your area?
The next goal is to determine the responsibilities of the salesperson. Does the salesperson control the gross? Salespeople certainly control their volume and they have a major impact on customer satisfaction. The salesperson can also have an impact on whether he or she starts the month on the 1st, or doesnêt really get down to work until the 20th.
What bearing does the salesperson have on the success of other departments? One consultant suggests paying a salesperson a commission on customer-paid labor performed on vehicles he has sold, because the salesperson has a personal interest in making sure the customer returns for service work.
You are faced with answering many questions about various portions of a complete compensation package, including:
Is a salary necessary to attract the quality of individual that you want to have working in your dealership?
What percent of the total compensation package should be salary?
Should you pay for longevity?
Should you establish a bonus pool that everyone shares according to his or her volume or gross contribution?
How many paid vacation, sick leave, and annual holidays should there be, and how do you calculate the compensation?
Should you provide health and/or dental plans?
Should you provide a paid maternity/paternity leave plan?
What about access to a profit sharing/pension/401(k) plan?
Do you provide sales contests? Are goals attainable? Does the same person win each time?
Do you want to provide a personal improvement allowance that reimburses salespeople for participation in personal or professional improvement programs (such as improve sales/management skills, earn sales certification, lose weight, stop smoking, learn a foreign or sign language, and so forth)?
Do you provide demonstration vehicles and how do they figure into the compensation package?
This article was adapted from A Dealer Guide to Using Pay Plans to Motivate Your Sales Force (SL23). Check NADA Management Educationês catalog at www.nada.org/mecatalog for the full publication. See also Paying to Motivate, Update ê05: Regional Compensation Trends for Automobile and Truck Dealerships in 2004 (PF14), as well as NADAês Salesperson Certification program.
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