Does anyone have experience in sales management compensation?

June 22, 2021

by a searcher from Harvard University - Harvard Business School in Palo Alto, CA, USA

Hello Everyone,
I’m negotiating a sales compensation package with the seller for a healthcare recruitment company for his post close role in the company. The seller is the key sales person for this company and will stay on for a year to help with transition, hiring/ training new sales people and bringing in new business. He is asking for a commission on any new business he generates as well as a sales manager compensation for the business new recruits bring in. Does anyone have experience with sales compensation in healthcare industry both for sales people and for sales managers who oversee the sales team ? Thanks for any information you can share.

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Reply by a searcher
from Northwestern University in Bozeman, MT, USA

Yasemin, thank you for posting this interesting objection from a seller. I can attest from negotiating through this process myself with a small business owner that some owners/founders tend to look at sharing value in a way that doesn’t expand the pie and align incentives (So, you may be able to negotiate a low commission <9%). That being said from a leadership perspective my gut feel for what it’s worth is to set up a comp package that pays the owner fairly and then creates real meaningful earning potential for the seller when he meets/exceeds/crushes your earnings targets. I’d reference Jason Lempkin work on how to motivate a sales leader with pay for inspiration on how to manage the comp proposal or feel free to text me at###-###-#### if you would like to chat through further with another sales leader.

Reply by a searcher
from University of Fribourg in 40822 Mettmann, Deutschland

In addition to Elliot's response and without knowing all the specifics of your deal, I would recommend to structure the comp package in a way that (a) provides significant upside for the seller to incentivize him but (b) give a higher weight to the hiring/training part because even if this means that you miss out on a few short-term opportunities, by letting him f.e. participate in the new business of new recruits, you can make sure that he will be motivated to hand over clients and knowledge as good as possible which will provide you with a more solid long-term foundation for the business.

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