3 steps to building the most reasonable and optimal compensation policy for sales staff

For many businesses today, the issue of salary and wages for sales staff still presents many difficulties during accounting. The main reason is the lack of a detailed and effective salary and bonus policy for employees. In the article below, we will share with you 3 steps to build a salary and bonus policy for sales staff and a free, flexible salary calculation template.

I. Structure of a Salary and Bonus Policy for Sales Staff

1. Basic Salary for Sales Staff

Business and Sales are diverse and constantly changing fields. The salary and bonuses for sales staff are not fixed but fluctuate depending on related factors such as the market, sales ability, commission percentage, etc.

According to surveys, sales staff at businesses typically earn a salary ranging from about 4-25 million VND/month. For B2B businesses, the salary for sales staff can reach hundreds of millions of VND when large contracts are secured.

Based on the basic salary, depending on work experience and the human resources policy of each business, the salary levels are divided as follows:

• No experience: fixed salary is around 4 – 8 million VND/month, and if commissions and bonuses are added, it will be around 4 – 12 million VND/month.
• 1-3 years of experience: the fixed salary will be around 4-12 million VND/month and from 4-15 million VND/month (if bonuses are included);
• 3-5 years of experience: the usual salary is from 4-20 million and can go up to 6-25 million VND/month with bonuses.

2. Salary and Bonus Policy for Sales Staff

The salary and bonus policy for employees in general, and for sales staff in particular, can be flexibly adjusted depending on the business. However, regardless of the business or the terms, these policies must be clearly stipulated in the labor contract and collective labor agreement, ensuring mutual consent during the signing and salary calculation process.

For the current salary and bonus policy in Vietnam, employee compensation is usually divided into 2 parts: basic salary and sales-based bonuses.

• Basic salary: a fixed monthly salary similar to employees in other departments
• Sales-based bonus: fluctuates depending on sales figures, reflecting the sales staff’s contribution to the company’s revenue

If only a sales-based bonus policy is applied, employees may benefit during peak seasons. However, when encountering incidents that affect revenue, their income source will be significantly reduced.

Therefore, there are now many ways to calculate salaries for employees in all departments in general and sales staff in particular, which businesses can refer to for appropriate application.

Read now: The most accurate way to calculate the 13th-month salary and the latest regulations on the 13th-month salary

II. Necessary Clauses in a Salary and Bonus Policy for Sales Staff

1. Salary Policy

This policy stipulates the salary level for sales staff based on the labor contract. This policy also serves as the basis for the business to calculate social insurance and health insurance contributions.

Features:

• The salary stipulated in this case is agreed upon by the employer and the sales employee during the interview process
• The business needs to clearly define the salary policy for different types of sales staff (official, probationary, remote workers, etc.)

2. Bonus Policy

• Fixed Percentage (Commission)

A fixed percentage is often applied to products/services of equivalent value. This policy ensures fairness for sales staff because the unit price of goods and the level of work are similar.

• Bonus based on pre-set conditions

This is a policy based on standards and conditions set by the business. If a sales employee exceeds this revenue target, they will receive a bonus corresponding to the revenue that surpasses the standard.

• Tiered Bonus

This is a bonus policy for employees that is divided into tiers, with each tier having a corresponding bonus value. In essence, this policy is similar to the bonus policy based on pre-set conditions.

• Insurance and Allowance Policy

Insurance and allowances as regulated are all part of employee compensation, so they should be stated in the salary and bonus policy. Many businesses overlook this part, leading to confusion in applying the salary and bonus policy.

III. 3 Steps to Building the Most Accurate Compensation and Bonus Policy for Sales Staff

1. Calculate and Plan Projected Costs for Business Operations

Businesses need to know how much they can spend on the sales department. This allows them to calibrate and adjust salary levels appropriately.

Before planning, leaders can ask: What percentage of revenue will be allocated to the sales department’s operating costs? This planning needs to reference previous business performance results, including: Average revenue over the years; Total average cost for the sales department over the years

The average cost for the sales department includes:

• Management costs: for positions such as Sales Director, Sales Specialist, Sales Staff…
• Income costs: salary, allowances, KPI bonuses, year-end bonuses, period-end bonuses,…
• Operating costs: such as phone bills, office supply fees,…

2. Balance Costs Using Hypothetical Scenarios

In reality, sales staff at each company handle different tasks. Generally, there are 3 basic working scenarios for sales staff:

• Scenario 1: The sales staff performs all tasks related to business operations, including finding customers independently (without data from the marketing department or agents); consulting, customer care, and closing deals on their own; and independently carrying out activities such as drafting contracts, making calls, etc.
• Scenario 2: The sales staff receives data from the marketing department; the remaining tasks are similar to the above;
• Scenario 3: The sales staff receives data from marketing, handles 50% of customer care and requests support for 50% of deal closings; and independently carries out activities such as making calls, drafting contracts, etc.

Balancing costs is like creating a contingency plan, anticipating potential possibilities. This helps the business easily handle and control any situation.

3. Calculate and forecast salaries and bonuses for the sales department

After planning salary and bonus levels in step 1 and balancing costs in step 2, businesses need to forecast revenue and the operating budget for the sales department based on the following basic requirements.

• Ensuring the rights of employees;
• Ability to recruit new sales staff (if needed);
• Ensuring alignment with the average market salary;
• Ensuring fairness for all employees;
• Ensuring compliance with legal regulations on basic salary.

Building an actual salary policy is not simple. It involves accompanying terms and conditions, not just the salary calculation formula. Therefore, when creating a salary and bonus policy for sales staff, businesses need to balance the interests of both parties to ensure employee rights while complying with legal regulations on business performance reporting.

IV. The 5 most common salary calculation formulas for sales staff

V. Latest Sales Staff Payroll Template 2022

Each method of calculating salary for sales staff has a corresponding payroll sheet. To help businesses save time in calculating salaries for employees, specifically the sales department, 1Office provides you with a set of convenient and detailed free payroll templates.

Download the template here => DETAILED TIMEKEEPING AND PAYROLL TEMPLATE

VI. Automate Salary and Bonus Management with 1Office Payroll Software

With its timekeeping management tool and payroll features, 1Office offers a solution flexible enough to meet the constantly changing salary and bonus policies of a business. With a system that links data between modules, the software will automatically calculate and pay salaries via bank accounts. This completely eliminates the process of compiling leave requests, fingerprint logs, etc., as well as complicated manual calculations, saving significant time and costs for the business.

• Allows for flexible definition of various payroll types, letting users choose the one that suits their business.
• Integrates all Excel formulas into timekeeping and payroll calculation – suitable for all businesses today.
• Flexibly set permissions for who can view and edit salaries/allowances in employee profiles.
• Automatically splits lines if an employee receives multiple salary levels within a single month.
• Accountants and directors can review and approve payroll 24/7 directly on the software.

Get a free consultation

In the article above, we have shared information about the structure, policies, and detailed payroll templates for sales staff. We hope that with this useful information, your business can easily and effectively apply it to your sales department.

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