What’s wrong with commission based salary for sales people in many organisations? Is it that at 10 percent, the company is keeping an obscenely huge amount of the proceeds? Or maybe there is just nothing wrong with them. After all, isn't it a very good way to give sales people incentives, while bringing more cash to the firm? Again, doesn't the salesperson earn for how much they worked for, earning little if they did not work much, or earning more when they work a lot?

First of all, salespeople will tell you that closing sales is not a walk in the park. I have seen many salespeople come and go, with few sales under their belt. While closing sales might not be easy, employers will tell you that getting good sales people is even harder. Good salespeople will tell you of the many close sales, that really never close.

But again, that is not what is wrong with the commission based sales system.

A friend, lets call him Tom, or Dick, or even Harry, perhaps Charles, yes, Charles. Charles works for an Indian IT outsourcing provider in pre sales. Pre sales, for those who are not familiar with the common IT term are salespeople whose task is to understand what  a customer needs, come up with a customised solution and sell that to the customer. In IT, products do usually need a lot of customisation, hence the use pre sales personnel.

Back to friendly Charles, who has graduated with a degree in Computer Science from one of the local public universities, and is skilled in software skills, swears that he can not work for his firm's engineering department.

Why would Charles, who takes home (or to a bar, or to a church depending on who you chose believe) close to KES 150,000 a month, not want to work in a different department in his firm, with the same skills?

Charles says that the chaps over at engineering take home a measly KES 50,000. His employer sees the efforts Charles makes at convincing a prospective client, and closing a sale. However, the employer does not see, or understand, what effort the engineer puts in to have the solution working, and desirable for Charles’ clients.

Elsewhere, at a Kenyan software house, it is said that the CEO has had issues with a high turnover of developers. The CEO says he spends lots of money to train his developers, and they are soon picked up by some of his clients and their competitors. The CEO has even demanded that former employees should reimburse the amount of money  the firm has spent training them, which is quite an amount, in the millions, with employees flown to Europe for weeks of training.

Talking to a former employee of the above firm, who was poached by Unilever, the employee had no apologies. While acknowledging and appreciating the training received at his former employer, he said that a net salary of less than KES 50,000 was nothing to take home. When approached by a firm such as Unilever, which can offer anything up to six times his previous pay, it becomes almost impossible to turn down the offer. Meanwhile, the likes of Unilever continue raiding his former employer as they seek skilled, knowledgeable employees to support solutions they acquire from such IT vendors.

At the same Kenyan firm, it is said that salespeople are paid well, probably twice, or even more of what their fellow developers take home, based on commissions.

It is therefore quite clear that there is a huge gap, and discontent, between what sales people in a firm earn and what non sales staff earn?  Is the ratio of input of other employers, in terms of both skill needed and effort, similar to that of a sales person?

There has been an approach in some firms to reduce the gap between salespeople and other staff. Non-sales team get a higher base salary as usual, but this is calculated in such a manner that there won't be much disparity in the final pay. Other less popular efforts might see other staff getting commissions depending on the firm’s performance.

Is the commission based take home for salespeople flawed? Do CEOs need to stay awake trying to strike a balance between what their employees pay?