Sales Employees Compensation: An Optimal Balance Between Fixed and Variable Pay

  title={Sales Employees Compensation: An Optimal Balance Between Fixed and Variable Pay},
  author={Pankaj M. Madhani},
  journal={Compensation \& Benefits Review},
  pages={44 - 51}
This conceptual paper describes the pros and cons of fixed and variable pay in sales. It posits that agency theory can explain the variation across firms in respect to the compensation system used. A successful pay system communicates organizational priorities and goals and motivates salespeople to achieve higher performance. Variable pay can help firms align employee and organizational interests. However, a shift from fixed to variable pay results in an increase in variable costs along with an… Expand
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