Comp plans for construction sales?

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May 30, 2024

by a searcher from Ohio State University in United States

I’m thinking of adding a sales person for a commercial and custom home construction company. We lean more toward residential now and are seeking expansion into commercial, hopefully adding a sales rep.

Does base + performance bonus employee make sense? Or is this typically a 100% commission 1099 role?

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Reply by a searcher
from University of Notre Dame in Charlotte, NC 28277, USA
I agree with Daniel's comments that a recoverable draw is common in residential. However I would add two recommendations: 1) review the structure with either HR or legal resources well-versed in compensation to avoid any surprises in the future, and 2) review your question about 1099's with similar advisors as there are specific qualifications for 1099 vs. W2 classification with significant financial risk to misclassifying. A few years ago I consulted for a lower-mid-market acquisition in construction that these two topics were a significant challenge to the business (the founders created the problems with compensation but the buyers' paid the price post-transaction).
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Reply by a searcher
from Southwestern University in Houston, TX, USA
Most residential salespeople operate on a recoverable draw, which is essentially 100% commission. Commercial is more of a base + commission situation as those take much longer to land.

That being said, a lot of the commercial construction companies I know don't have salespeople per se, but a person or group that responds to RFPs, since almost all major commercial construction is done with an RFP. That would be a base, no commission situation.
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