Philosophy
CompensationMaster's approach to systematizing compensation is based on strategies that have been proven to offer significant benefits.
Key components to this approach are:
- Base compensation on sales force contributions
- Treat profit as an expense
- Allocate expenses fairly among sales professionals
- Base commissions on breakeven
- Offer a choice of compensation plans
- Recoup costs
- Align sales force and management
- Reduce waste
Treat profit as an expense
The second goal of any company should be to make a profit. The best way to ensure profitability is to add the desired amount of profit into the expense allocation.
Profit can be treated as either a fixed or a variable expense. If it is designed as a fixed expense, that puts an upper cap on profit. So most companies prefer to define it as a variable expense. This allows them to continue to benefit as revenue grows.
This approach is an unusual one – most businesses define profit as what is left over after expenses – but treating profit as an expense, and planning for it, is the most effective way to make sure the company is profitable.
To learn more, schedule a demonstration over the Internet.
