5 ms·

Why is sales special? Why not just have some performance bar for that, just like all the other positions?

sofixa 1y ago
Because sales people are used to work on incentives, including going over and getting rewarded for it. If they have a fixed salary with a high objective to "make it" (e.g. if you sell less than $X, you get fired), lots of sales folks will skip on it because they can't go over, and most probably prefer to have a quarter or two or year at e.g. 70% salary while working on longer term deals, rather than losing their job for not being good enough within that arbitrary time period. And going over their quota can be wildly lucrative depending on the terms.
- Quarrel 1y ago
  FWIW, it seems like nowhere is this truer than SF/SV. Outside the bubble, it isn't always the case, or the structure can be a bit different, but salespeople in the Valley (as it were) are a different breed.
  - sofixa 1y ago
    No, it's just how sales works, it's almost always on commission.
    - vlovich123 1y ago
      Tesla salespeople do not work on commission. Also you can align incentives through stock grants which appreciate by you selling more.
      - sofixa 1y ago
        > Tesla salespeople do not work on commission I work with tech salespeople with a variety of former employers as tech sales people, and I've never heard of anyone having worked without a commission. I'm vaguely in tech sales myself (solutions architect) and I'm on commission too, and so is everyone who joins our division from similar employment (solutions engineers/architect, or even customer success folks).
        vlovich123 1y ago
        While I agree it's the norm, clearly Tesla has gone a different route and it's possible to do so.
  - Aurornis 1y ago
    Sales has been commission-based everywhere I’ve worked, including companies based in other countries. Commission based sales was definitely not a Silicon Valley invention.
  - cestith 1y ago
    Ask a local real estate agent or real estate broker how much base pay they make. Or, heck, a car salesperson or an ad salesperson at your local TV or radio station. It’s all commission-based. In some of these fields in the US the norm is 100% commission-based with no base pay. In others someone might make one to three times minimum wage, but will end up being some of the highest-paid people in the company based on commissions of anywhere from 1% to 50%, depending on the industry.
rubicon33 1y ago
If you’re asking this question then you have really no idea how the sales engine works at a company. It’s inherently incentive driven.
hiddencost 1y ago
Sales culture is heavily incentive and performance based. It sucks but they like to think that if they work harder they'll get paid more.
- ghaff 1y ago
  It's not universal but B2B sales in particular have evolved to incentive/performance compensation to a large degree. Wasn't always the case but (most?) of those companies aren't in business any longer. Also extends to the sales hiring process. Not that companies don't look at track records but it's also the case that sales managers don't have any issue firing people who don't meet their numbers.
castlecrasher2 1y ago
Because good sales staff make a ton of money through a ton of sales. Any other incentive structure is unlikely to attract high performers.
- bobsomers 1y ago
  How is this not exactly the same in engineering though? Performance reviews at top tech companies are pretty much designed to identify the super high performers and shove massive bonuses and equity grants their way. And those equity grants are effectively as good as cash, since they are publicly tradable stock.
darren0 1y ago
It's pretty fundamental to the personality of people in sales to be driven by getting the sale and getting compensated based on the deal size. If you remove that carrot, it just doesn't work. Some sales people will make millions, some will make nothing.
- diggan 1y ago
  > If you remove that carrot, it just doesn't work How come it works for basically every other job on this planet? Developers aren't paid per feature implemented/bug fixed, and we still do those things, how come sales people are unable to do things for a fixed monthly salary?
  - ChrisMarshallNY 1y ago
    Sales works that way in every industry. A top salesman can make more than the CEO from commission. Many top salespeople have a zero base salary. The pressure is pretty crazy, though. I’m not cut out for that kind of thing.
    - diggan 1y ago
      I do know that (I myself also worked in sales for a short stint, unrelated to software though), what I don't understand how these magical "sales people" apparently can't work for a fixed salary when literally everyone else can. Apparently the rest of us can do high quality work without being paid for each feature/bug fixed, yet these individuals cannot? > Many top salespeople have a zero base salary. Hmm, probably true in some places, but here (Spain) that wouldn't even be legal. When I worked in sales we had minimum wage + commission, but I'm sure the salary would be 0 if they were allowed to set it up like that.
      - ChrisMarshallNY 1y ago
        I have a few [wealthy] salespeople friends. Most have “commission-only” (0 base) jobs. Many jobs will start you with a base for a few months, while you build commissions, but they stop it, after a while. They can also get fired at the drop of a hat. Not much job security. Sales are easy to convert to incentives. Just take a cut of the sale. It’s not so easy to calculate value from other jobs.
OkayPhysicist 1y ago
The key difference between everyone else in a company and Sales is that Sales is where the money comes in, directly. It's approximately trivial to point at a sale, see how much money it made, and then who made the sale. So commission is a natural compensation structure for salespeople. For everyone else at a company, their individual contribution to the company making money is a lot more diffuse, and any metric you might be tempted to try and put a commission on is at risk of being gamed. Whereas "how much $$$/worth of stuff did we sell" is pretty much THE metric by which we judge a business as a whole.

Because sales people are used to work on incentives, including going over and getting rewarded for it. If they have a fixed salary with a high objective to "make it" (e.g. if you sell less than $X, you get fired), lots of sales folks will skip on it because they can't go over, and most probably prefer to have a quarter or two or year at e.g. 70% salary while working on longer term deals, rather than losing their job for not being good enough within that arbitrary time period. And going over their quota can be wildly lucrative depending on the terms.

Quarrel 1y ago
FWIW, it seems like nowhere is this truer than SF/SV. Outside the bubble, it isn't always the case, or the structure can be a bit different, but salespeople in the Valley (as it were) are a different breed.
- sofixa 1y ago
  No, it's just how sales works, it's almost always on commission.
  - vlovich123 1y ago
    Tesla salespeople do not work on commission. Also you can align incentives through stock grants which appreciate by you selling more.
    - sofixa 1y ago
      > Tesla salespeople do not work on commission I work with tech salespeople with a variety of former employers as tech sales people, and I've never heard of anyone having worked without a commission. I'm vaguely in tech sales myself (solutions architect) and I'm on commission too, and so is everyone who joins our division from similar employment (solutions engineers/architect, or even customer success folks).
      - vlovich123 1y ago
        While I agree it's the norm, clearly Tesla has gone a different route and it's possible to do so.
- Aurornis 1y ago
  Sales has been commission-based everywhere I’ve worked, including companies based in other countries. Commission based sales was definitely not a Silicon Valley invention.
- cestith 1y ago
  Ask a local real estate agent or real estate broker how much base pay they make. Or, heck, a car salesperson or an ad salesperson at your local TV or radio station. It’s all commission-based. In some of these fields in the US the norm is 100% commission-based with no base pay. In others someone might make one to three times minimum wage, but will end up being some of the highest-paid people in the company based on commissions of anywhere from 1% to 50%, depending on the industry.

rubicon33 1y ago

If you’re asking this question then you have really no idea how the sales engine works at a company. It’s inherently incentive driven.

hiddencost 1y ago

Sales culture is heavily incentive and performance based. It sucks but they like to think that if they work harder they'll get paid more.

ghaff 1y ago
It's not universal but B2B sales in particular have evolved to incentive/performance compensation to a large degree. Wasn't always the case but (most?) of those companies aren't in business any longer. Also extends to the sales hiring process. Not that companies don't look at track records but it's also the case that sales managers don't have any issue firing people who don't meet their numbers.

castlecrasher2 1y ago

Because good sales staff make a ton of money through a ton of sales. Any other incentive structure is unlikely to attract high performers.

bobsomers 1y ago
How is this not exactly the same in engineering though? Performance reviews at top tech companies are pretty much designed to identify the super high performers and shove massive bonuses and equity grants their way. And those equity grants are effectively as good as cash, since they are publicly tradable stock.

darren0 1y ago

It's pretty fundamental to the personality of people in sales to be driven by getting the sale and getting compensated based on the deal size. If you remove that carrot, it just doesn't work. Some sales people will make millions, some will make nothing.

diggan 1y ago
> If you remove that carrot, it just doesn't work How come it works for basically every other job on this planet? Developers aren't paid per feature implemented/bug fixed, and we still do those things, how come sales people are unable to do things for a fixed monthly salary?
- ChrisMarshallNY 1y ago
  Sales works that way in every industry. A top salesman can make more than the CEO from commission. Many top salespeople have a zero base salary. The pressure is pretty crazy, though. I’m not cut out for that kind of thing.
  - diggan 1y ago
    I do know that (I myself also worked in sales for a short stint, unrelated to software though), what I don't understand how these magical "sales people" apparently can't work for a fixed salary when literally everyone else can. Apparently the rest of us can do high quality work without being paid for each feature/bug fixed, yet these individuals cannot? > Many top salespeople have a zero base salary. Hmm, probably true in some places, but here (Spain) that wouldn't even be legal. When I worked in sales we had minimum wage + commission, but I'm sure the salary would be 0 if they were allowed to set it up like that.
    - ChrisMarshallNY 1y ago
      I have a few [wealthy] salespeople friends. Most have “commission-only” (0 base) jobs. Many jobs will start you with a base for a few months, while you build commissions, but they stop it, after a while. They can also get fired at the drop of a hat. Not much job security. Sales are easy to convert to incentives. Just take a cut of the sale. It’s not so easy to calculate value from other jobs.

OkayPhysicist 1y ago

The key difference between everyone else in a company and Sales is that Sales is where the money comes in, directly. It's approximately trivial to point at a sale, see how much money it made, and then who made the sale. So commission is a natural compensation structure for salespeople. For everyone else at a company, their individual contribution to the company making money is a lot more diffuse, and any metric you might be tempted to try and put a commission on is at risk of being gamed. Whereas "how much $$$/worth of stuff did we sell" is pretty much THE metric by which we judge a business as a whole.