Despite Commissions, Employers Should Still Offer Raises

Where I currently work, I get paid in two ways. I receive an hourly wage which includes over time. And I get a commission from the profits from my sales.

Luckily, I am in business-to-business sales, which simply means that once a customer is established, and because we sell things those businesses need in their day-to-day operations, there is a lot of repeat business.

It doesn't mean that once you have a customer hooked the work stops. Keeping a customer in your corner is as important as getting them buying in the first place. Because we're not the only dog in the race, of course.

And luckily as well, my customers remain mine. So, no matter who takes the call or types up the order, the commission for the sale belongs to me.

The bulk of my earnings comes from the portion I earn from sales. So really, the bread and butter, so to speak, is the commission. Not the hourly wage. And let me just say here, for the record, it's a paltry wage. I will get to that in a moment.

One other benefit of the commission is that so long as I am growing business from existing customers as well as continuing to bring new customers on board, my pay will always rise. And it has. Over time I have essentially enjoyed annual percentage increases beyond any that a traditional wage earned would ever provide.

3% is a fairly common annual increase one might expect. In my job, because of the commissions, if I grow my margins by 20%, I essentially grow my earnings by a comparable amount.

For example, I made 25.4% more in my own personal earnings in 2022 than I made in 2021. And in 2021 I made 19.6% more than I made in my personal earnings in 2020.

In no way am I going to complain about earning these kinds of increases. Essentially, because of the way my compensation is structured, I am in control of what I make and how high I can go. And at the same time, there are no caps on what I can make. There are no caps on the number of customers I am allowed to manage.

In fact, the only limitation I have are certain territory lines. But even there, there are no hard lines drawn except that I must operate within the main territory of the branch, which right now includes 9 1/2 states.

My main "solely owned" territories are Minnesota and Wisconsin, for example. But another salesman can have an account in either of those states if they were the one to establish an unknown account.

I own some accounts that reside in the territories of other salesmen as well as they own some that reside in mine.

Some territories are shared such as states like Illinois, Kansas and Missouri.

The bottom line is that there is plenty of room to work and earn and increase our bottom lines provided we are willing to do the work to keep growing our base as well as adding to it. And within the entire area our branch operates, there is plenty of market share we do not currently have that we can capture.

So, expecting that in 2023 I can grow my earnings by another 20% or so is not at all an impossibility. A looming recession notwithstanding, which could present some challenges of course.

In the place I work I get raises. But they all come from me. They are all a product of what I produce, essentially for myself. The company I work for, who also benefits directly from what I produce, provides virtually no raises at all.

In the first couple of years, I did receive some raises. In about two years they added up to about $1.50. Again, the hourly wage is paltry.

After that it took me another 4 years before I received another $1. And that raise came over two years ago with no raise in sight coming any time soon. The common response when you want more money, from management, is to go sell more stuff. And as I have illustrated, that does work. In fact, it works quite well.

But I still think there is a strong benefit to giving the employee who is performing, a little bit more on the front end. The hourly wage. What it says to the employee is, "We, the company, recognize the efforts you are making, and we thank you for helping us all to grow as a company."

If I am growing business, the entire company is growing, and it seems only right that I not only share in the growth of my own end of the business, but from the business as a whole as well.

When the company does not offer raises, it is essentially enjoying a higher rate of return on its initial investment, which is my hourly wage, for which I enjoy no benefit from.

I am still going to grow of course. I enjoy the benefit I provide myself in accomplishing that.

But my point is that the company should have an interest in continuing to invest in me throughout the process. Especially if my growth performance is adding a higher and higher rate of return for them.

From fiscal 2020-2021, for example, my sales increased by roughly 30%. My sales grew another 40% in fiscal 2021-2022. We all made more money as a result of that. But because the company paid no more on the front end, they made more proportionately. And because they continue to not pay more on the front end, they will enjoy a higher and higher proportionate benefit from my own increases in sales going forward.

Again, it is not a complaint. Rather, it is an observation.

I get paid a lot of money for what I do. There is no doubt about that. I don't think there will ever come a time when I might decide enough is enough, once I have built what I have built, and simply stop growing—or trying to.

At the same time, I just might. That's human nature in a way. You become comfortable at some point. Without the added benefit of seeing more on the front end for what I earn higher on the back end, there may come a time when I am less incentivized to fill in the back end.

In other words, I may start to coast. I may set the cruise control and kick back a little bit and just enjoy the ride. If there is no wind behind me to help me get along down the road, what is the incentive to do any more?

Smart companies realize that the money they pay us is what propels us forward and makes us want to work harder so that we can all enjoy a gain from it. If the incentive is limited, so will be the result ultimately.

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