COMPENSATION AND TERRITORY 1. What a plan of compensation should accom plish.—The objects to be considered in fixing the amount of compensation and the manner in which it shall be paid are: to secure the type of men desired; to keep them working at maximum efficiency; and to retain them in the organization. In this connection, 'it should be remembered that in the early days of most concerns a strong type of specialty salesman is needed, and only that type will succeed. Such men require and are entitled to fairly large incomes. As the proposition is more widely advertised and becomes better known, it gradually becomes easier to sell and then a slightly different type of salesmen may reasonably be expected to succeed. With training methods fairly well established, younger men and men without selling experience may be added to the or ganization. It is not necessary to provide large re muneration for these men at the start. The avera(re cost of making a sale, therefore, can be reduced. This should not be understood to mean that an effort should be made to reduce the incomes of those men who have sold the proposition in its earlier stages. The princi ple applies only to new men being added to the or omnization.
2. Salary and expenses.—The method of paying salesmen a salary and expenses is the oldest and prob ably the most prevalent. It affords the sales man ager almost perfect control over his men. They can be routed from town to town, instructed how long to stay in a town and whom to see while there. They can be required to make out any reports that the sales manager may deem necessary, and can be instructed to do work other than selling if emergency requires. If the house deems it advisable to deal with small, iso lated towns where the sales will be few, and is willing to pay the salesman's salary for doing so, that is the business of the house and not of the salesman. The same principle holds' good in tbe case of missionary work where no immediate sales are probable. A firm which does national advertising to create a consumer demand, and which therefore desires almost perfect distribution will do well to use the salary-and-ex penses basis of remuneration.
3. Some drawbacks of the salary sal ary-and-expenses method has, however, at least one great disadvantage. The salesman has no immediate
incentive to strive unceasingly after big business. Of course, the salesman's salary is usually fixed by adding his salary and expenses and determining what per centage of his gross sales they constitute, and raises are made on this basis at the end of the year. It would seem as if this system would stimulate the men to greater effort but most sales managers would testify that it rather has the effect of causing the salesman to slow down when he is producing sufficient business to warrant his present salary. This condition is prob ably aggravated by reason of the fact that most houses seem averse to allowing a salesman's salary to reach a high figure, even tho the volume of his sales would seem to warrant a very large salary.
4. Salary and commission.—To combine the ad vantage of the salary plan—the decided control that the firm has over the salesman—and the advantage of the straight-commission system—the incentive that it gives salesmen to put forth their best efforts—many houses base their compensation on a combination of salary and commission. The salary is, of course, smaller than if it were the only remuneration, and the rate of commission must be about half, or even less than half, of what could be allowed under the straight commission system. Under this plan the salesman's expenses may or may not be paid by the house. Some houses, in order to strengthen their control over the man, agree to pay his railroad expenses, but nothing more.
5. Advantages of the salary-commission plan.— There are almost countless varieties of the salary-and commission plan of payment. /-k. usual practice is for the house to pay a commission in addition to the salary only if the salesman takes a prescribed amount of business above his minimum. Up to a certain higher amount, a small commission is paid, and beyond this point, the rate of commission gradually increases for increasing amounts of business. In lines where the salesman is allowed freedom in quoting prices, he may be informed of the cost of each article and his commission may be figured as a certain percentage of the price that he secures over and above this cost figure. This method, of course, furnishes a strong incentive to the salesman to hold up prices.