Developing a sales structure

The issue of how to pay a sales staff is a complex one, with many options available. In the design fields, especially kitchen design, a draw vs. commission structure is typical, but often counterproductive. Some may offer a strict commission only system, but rarely will this work with anyone other than very experienced, financially stable professionals. A starting point for developing a pay structure (not pay scale, we will discuss this at a future date), is analyzing why people in general work. Abraham Maslow in 1943 developed his “Hierarchy of Needs”, which is commonly used in the psychology and business development fields. The chart is as follows…

For purposes for this discussion, we will eliminate the financially stable seasoned professional. These often are more concerned with long term, and in the kitchen design industry, are few and far between. More often, the typical designers are younger or experiencing a career change, are not college educated, and cannot afford to go very long without a paycheck. This chart can give us some valuable information on motivation for these employees, and a consistent way to keep them focused on the tasks you need done, and hopefully long-term employment with you.
Your goal is to have employees at the self actualization stage or close to it. Here they are comfortable in their career, see the big company picture, and have enough freedom of thought to be creative and truly excel. The opposite end of the spectrum is the psychological stage, where the basic human needs are the overriding drive. Humans will always work to make sure they have food, a place to live, and can simply maintain existence. However, those in this category are often robotic, going through the motions, as these basic needs are all-encompassing. It is difficult to focus on anything other than these needs when they are not met. How well do you focus on the sales process when you have not eaten in a while? Can you really put your customers first when you are constantly concerned about paying your rent or possible eviction?
It is important to know where on the chart a potential employee falls, or if a current employees’ situation has changed to a point that his/her status has changed. You will notice a lack of focus, a lack of follow through with existing clients where a majority of commissions have been paid, or even simply a constant discussion about money (raises, advances, etc.). However, keep in mind that the amount an employee is making is not often a factor in this. Two employees making the same amount can be in different stages depending on personal situation, such as family issues, or even just a difference in perceived needs.
We can now use this information to develop a pay structure. The most typical in the industry is a draw vs. commission. Here, an employee is paid each week an amount that will be paid back to the company with earned commission. For example, if the weekly draw is set at $500.00, within 13 weeks (1/4 year), if no commissions have been paid, the employee with essentially owe the company $6500.00. At 26 weeks, this is $13,000.00, and continues to grow. Considering the amount of time it takes to make sales in the kitchen design industry, it is not unrealistic to think this may be the case, even with a skilled designer. If the employee is in the bottom group, and already very concerned about money issues, this will seem to them as an additional burden, and will greatly decrease productivity. It is for this reason that car dealerships have a very high turnover. Once the draw amount starts to increase, the stress on the employee and employer increases, and can create great tension in the workplace.
I would strongly advise against this pay structure. It is often used by employers as a means to “hedge your bet” in hiring new designers, but really is irrelevant. Since you’re going to have substantial start-up time for new designers in any case, would you rather have a happy, focused employee starting to experience sales success, or an employee that is now burdened down with an increasing draw amount and added debt to the company (and likely ready to quit)? There is no real benefit to a draw system in paying employees. The employee will always feel like they are “borrowing” money from the company, despite the fact that they are working a full time job, and the increasing amount will only serve as a distraction.
To replace this, you may consider a lower commission structure and a base salary. The amount needs to be enough that basic human needs are met, but it is money well spent. The chance of real success greatly increases in this structure, and the new employee will more quickly become part of the “team.” Sure, some employees will not work out, but the end result will be no different than had you paid a draw, and overall a sales staff with fewer outside pressures will yield stronger results.