Home > Set of Blogs > Quora: What are the pros and cons of: commission models and salary models? When is the best time for a company to use either strategy?

Quora: What are the pros and cons of: commission models and salary models? When is the best time for a company to use either strategy?

My answer on Quora to: What are the pros and cons of: commission models and salary models? Whe… http://qr.ae/ykBY

Commission based compensation drives from performance measures, which will encourage employees to compete and stretch measures. Usually used for growth and aggressive market entry and expansion. It will also distinctly help to evaluate which employees will perform better under compensation measures versus a safer monthly salary income. Personally I prefer commission plans since it sets goals and helps employees strive to meet them on both individual or a group/team level; as well as motivates workers to get more involved (vs staying lazy).

On the down side it may demotivate your workforce who prefers monthly fixed salary. It’s always good for a company to have both for different types roles, therefore switch to commission based if the business sources are scarce, competition is high and the employee turnover is low. Also, it has been used as part of sales driven strategies.

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