A commission-based job, typically seen in sales positions, is one in which individuals earn income based on the amount of products or services that they sell. While some sales positions offer a base salary plus additional commission pay, some employers choose a commission-only structure, meaning the employee will only get paid based off of their sales performance.
A commission-only compensation structure can be appealing for both employers and job seekers in the agriculture industry. However, these types of sales positions have their drawbacks and can present a variety of challenges for both parties. Let’s dive into some of the main pros and cons both employers and sales candidates should consider when it comes to commission-only pay structures.
Pros For Employers Using a Commission-Only Pay Structure
Cost-Effective
For employers, paying straight commission for sales employees mean less fixed payroll costs that would come with paying base salaries. It also means that since you only pay employees once a sale is made, you’re only paying for results.
Motivated Sales Force
Sales employees who work solely on commission tend to be more motivated, as they have to sell to earn their pay. The more they sell, the more they earn, which can drive higher performance.
Attracts Entrepreneurial Candidates
Commission-only sales roles can be an attractive option for candidates who are natural go-getters with strong sales skills or entrepreneurial drive. For the right sales professional who is confident in their selling abilities, unlimited earning potential can be highly rewarding.
Cons for Employers Using a Commission-Only Pay Structure
Higher Turnover
A commission-only structure isn’t a good fit for everyone. Organizations can face higher turnover rates due to employee burnout and reps deciding they cannot stay in a job with an inconsistent income.
Reputation Risk
Some people view companies who use a commission-only pay structure as exploitative. To avoid any negative assumptions about your company, be sure to structure your commission pay ethically and be transparent. Communicate details clearly about your pay structure in your job postings and during candidate interviews.
Cultural Challenges
When your company operates on a commission-only sales structure, employees may be more independent-minded and only focused on making sales, and less focused on the company’s overall mission. This may hinder your culture and make it more difficult to enforce your branding, processes, or policies.
Hiring Challenges
Recruiting agriculture sales professionals for commission-only positions can be a challenge, especially in saturated or competitive markets. Financial stability is a priority for many candidates, leaving employers with a smaller pool of talent to choose from for straight commission roles. Even candidates with proven success in sales may not be willing to work without the safety net of a base salary. These candidates will not typically leave a company where they have built a sizeable sales portfolio to start over on a commission-only basis.
To help attract more candidates to your commission-only roles, consider what other perks you can offer your employees. These may include a performance or end-of year bonus, training and/or development opportunities, or a flexible schedule.
Commission-Only Pay Structure Pros for Sales Employees
Unlimited Earning Potential
While there is no guaranteed base salary, an uncapped commission structure can allow high performers to earn significantly more than they would in a traditional salaried role. Highly motivated employees will be rewarded financially for their hard work and success.
Flexibility
Commission-based sales roles often come with more flexibility than a standard 9-5 position. Some companies allow sales employees to make their own schedule, and many agriculture sales jobs are a hybrid structure, allowing you a combination of working from home, in-office, and on the road.
Depending on the company and position, some individuals can work a full-time, salaried job while working a contracted, commission-only role part-time as their schedule allows.
Skill Development
The fast-paced learning environment in a commission-based sales job can help you quickly build your skills in communication, relationship building, negotiations, time management, and more – growing you into a strong agriculture sales professional in a short period of time.
Commission sales experience can also serve as a great steppingstone for someone looking to start their own ag business or become a sales consultant.
Commission-Only Pay Structure Cons for Sales Employees
Inconsistent Income
Although there is opportunity for high earnings, working in a commission-only role means your income will be unpredictable, and not guaranteed. This can feel uncomfortable, especially in the first several months of the job or in slower selling seasons for the product or service.
This type of variable income can also make it difficult to get approved for credit and loans, too.
High Pressure
With no guaranteed income, sales employees will likely feel high stress and pressure to perform. Not only to earn a living, but to also prove themselves to their employer. High stress can lead to employee burnout and dissatisfaction at work. It’s important for sales employees working in this type of environment to prioritize their mental health and find a healthy work-life balance.
Lack of Benefits
Often, commission-based employees are categorized as independent contractors instead of traditional full-time employees. This typically means that health insurance, paid time off, or retirement benefits are not offered by the employer, and employees are responsible for securing their own outside benefits. In this case, some individuals obtain benefits through their spouse’s employer or go through a third-party provider.
Conclusion
If done ethically and with clearly set expectations, commission-only sales structures can be cost effective for ag employers and highly rewarding for the right candidates. Whether you’re an employer looking to adopt a straight commission pay structure for your team, or an ag sales professional considering a commission-only job, make sure to weigh the pros and cons to make an informed decision.
Are you an ag employer looking to grow your sales team? AgHires is the leading ag recruitment firm for small family farms to Fortune 500 companies. From job advertising to full-service recruiting, we offer a variety of tailored solutions to meet your hiring needs. Our team comes from the agriculture industry and is passionate about fueling the success of ag organizations like yours.
Schedule a brief meeting or give us a call at (844) 244-4737 to learn more about how we can help you find your next great hire.
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