Does Commission Only Work?

There is a disturbing current trend in the hiring of salespeople as commission only, independent contractors in today’s business environment.  Having been a sales guy for over 20 years myself, I have seen and taken just about every compensation package offering available, including huge commissions based on performance.  This is not a new practice but with today’s business condition, I feel like it is becoming much more of a standard than an occasional option for certain industries.  Hiring sales people as commission only contractors is detrimental to a company and could cripple sales simply because of hiring and compensation policies.  One of the most important groups in your company is isolated, set apart, and not valued enough to be an employee.  Contrary to popular belief, not all sales people are motivated by money or by hanging huge money carrots out in front of them. I am not conveying that performance is not required or expected by sales people.  On the contrary, I am a huge advocate of accountability and holding employees feet to the preverbal fire.  I feel that EVERY employee should be held to the same accountability standards, not just the sales department.   As a business owner, would you ever consider a commission only compensation package for your accounting or IT department, or perhaps your HR or warehouse personnel?  Of course not.  These departments are of critical importance to the company.  Is your sales department of any less critical importance to the success of your company? Should this department be the only group that is not worthy of being paid a salary or valued for their experience? The mindset of “they do not cost me unless they sell” is hiring for expected failure rather than hiring for excellence. Hiring commission only sales people because they do not cost the company unless they sell is a flawed logic.  You as the company spend the time to post a job, interview people, hire them, and train them on your product or service.  You in fact spend a great deal of time, effort, and money to hire salespeople that you do not expect to work out.  You then place these people in a position to be the face of your company.  They are your “first impression” to your potential customers.  Have you ever considered the number of potential customers you lose because of a commission only sales person that is not capable or that is ineffective at their job?  Depending on your business, commission only salespeople can cost you everything and force you to close your doors.  I will leave the discussion about unrealized revenue from lost sales due to poor hiring practices for another blog. Something else to consider is that by law, a company is not allowed to control or require a schedule for independent contractors, nor is the employer allowed to stop them from working for other companies.  According to the IRS, you cannot even provide them office equipment or desk space or they are by definition, classified as employees.  This is the nature of the beast of an independent contractor.  Put yourself in the employee’s shoes and see that they will work for as many companies as they can to see what products or services will make them the most money the fastest.   I have had personal experience working with a company that only hired commission only sales people. They could not even have weekly scheduled meetings to review sales pipelines and potentials.  How were they ever going to forecast anything, much less know if their sales objectives were going to be met? In my humble opinion, if you want sales, then you hire professional salespeople and you pay them like any other employee.  Ask yourself the following questions when you decide to hire a new salesperson.

  1. Is a salesperson less of an employee than an accountant or someone in HR or IT?
  2. Do you know the questions to ask to find a sales person during an interview?
  3. Are sales important to the success of your company?
  4. How much revenue are you loosing by hiring the wrong people?
  5. Does hiring unqualified sales people affect your company’s reputation?
  6. How does a commission only sales person, without any financial commitment by the company, have the company’s best interest in mind?

To conclude, I tried to list several reasons and examples why hiring sales people as commission only contractors is destined for disappointment.  As easy as it sounds to just let anyone sell your product or service because they do not cost you, why would you ever leave something so critical to your future in the hands of people you don’t trust enough to hire?  Value your sales people for their experience and capability and they will become cornerstone employees for your company.  


Keenan is A Sales Guy Inc’s CEO/President and Chief Antagonist. He’s been selling something to someone for his entire life. He’s been teaching and coaching almost as long. With over 20 years of sales experience, which he’ll tell you he doesn’t give a shit about, Keenan has been influencing, learning from and shaping the world of sales for a long time. Finder of the elephant in the room, Keenan calls it as he sees it and lets nothing or no one go unnoticed.