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Interesting to see the justification for screwing engineers on the pay. EDIT: To clarify--the idea of commission is effectively an equity stake in either the

Interesting to see the justification for screwing engineers on the pay. EDIT: To clarify--the idea of commission is effectively an equity stake in either the revenue or profit (depending on the setup, right)? So, the sales folks see an immediate return on their work. The engineers, while salaried, have no such visceral link to the performance of the product...just some trivial paper and the thin sliver of hope they won't be fucked over during an exit.

davideous 12y ago
Here's a good article on why Fog Creek does not pay sales commissions: http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ We don't pay sales commissions at my company, and it works well for us. It does help the sales department to work more as a team.
- mpdehaan2 12y ago
  Love the idea of sales not working on comission, as it also ensures more directness with the customer, and looking after their interest and what products are best for them. I still remember some calls with a software company back in the day and I really liked how they told me when a product wasn't for me, and when I should use the competition. And it was good advice. It increased my loyality to that brand a lot and I shared that story a lot. Plus, you don't get things like the sales people making more than others for closing leads they didn't generate, which isn't a great feeling either. The whole team is responsible for the sale, and the sales guy may or may not have put more sweat into it. Enterprise sales folks making 2-3x what senior engineers make - especially - isn't right - and it happens a lot. Pay should be equal to work expenditure, at risk of sounding somewhat communist. (let's not even start on 8 figure CEO compensation).
- kwindla 12y ago
  I'd definitely be interested in knowing more about your company, davideous. I have no doubt that not paying commissions can work for some companies. And getting comfortable with paying commissions to salespeople took me, personally, a really long time. (Too long, from the perspective of being a good CEO and doing what needed to be done to move my company forward.) The arguments in the Fog Creek post sound right, and really resonate with those of us who are engineering/product people. But they don't match the reality of my own experience. At least for the high-cost, high-touch, long sales cycle stuff that I have the most experience with, the best salespeople all want their compensation to be heavily weighted towards commissions. So if you want to hire the best sales reps -- and, just as with engineers, you really, really want to hire the best -- you have to recognize and understand that preference. But I'd be happy to be wrong about this! In addition to Fog Creek, I remember reading another blog post about a startup that doesn't pay commissions. Maybe a Foundry Group company: Moz? I can't find that post now, though.
  - porker 12y ago
    ThoughtWorks dropped paying commission: http://www.thoughtworks.com/news/zero-commissions http://www.thoughtworks.com/news/zero-commissions
  - davideous 12y ago
    We sell enterprise email server software. It's high-touch and sometimes a long sales cycle. Lots of demos of the software via screen-share. Right now we have two people in sales. They are collaborating multiple times a day on Skype and help each other out on basically every sale. Much of your concern seems to be about the ability to hire the best people, given the preference for commissions. I've been fortunate here: I've been able to hire my sales reps through personal connections, based off of reliably knowing their prior performance -- and I know I have really good people. Perhaps it would have been harder to start the sales organization without commissions without these connections. But it's working for us right now.
pbreit 12y ago
Downvote on the first sentence which is incendiary and probably wrong. And even with the edit, you still don't really get that many businesses live and die by sales. Product is relatively easy to build.
- angersock 12y ago
  "probably wrong" if you are only looking at engineer salaries at the coasts or at BigCo. I very much get that businesses live and die by sales--anybody who's been in a startup (much less founded one) does. But I also get that part of the reason the product sells is because the people working on it are personally invested in the outcome. The engineer trades a somewhat higher salary and lower ceiling for the ability to directly impact how the market and product interact. It's precisely because sales is so important that I am curious if engineers wouldn't be better served (as well as their companies!) were they treated the same as sales folks. The fact is that engineers produce value but don't capture it nearly as well, and I cannot help but wonder what would happen if they worked on commission or royalty.
  - berkay 12y ago
    The challenge is measurement. For sales people, it's easier to measure the individual sales, hence you can have commission based on individual performance. For developers it is much harder to measure individual performance. We have implemented commission for developers based on overall sales number. Based on pre-announced targets, developers can get 1x, 2x, 3x salary as a bonus/commission at the end of the year. No caps.
jusben1369 12y ago
Imagine if you as an engineer were told your total compensation was $150,000 per year. But only half of that would be certain. The other $75,000 would be dependent on how many unique features you helped ship in a month/quarter/year and how many of those were bug free. And you didn't have full control over the release cycle - there were a lot of dependencies with other orgs (devops/QA/product management) And as your company grew they could yank you off a feature about to release and put you in a new group where you were just starting to work on a new release. You had to assume that your company wasn't going to screw up and impact your ability to ship. That's at least the right mindset to compare yourself to sales person compensation. And remember, technical sales people can do very well so if it looks more attractive you should think about making the leap.
- bcoates 12y ago
  Sounds great. It would certainly beggar-thy-neighbor the deadweight over to companies that that give you the same check every two weeks no matter how little you deliver.
jsonne 12y ago
Sales people have much lower base pay and it's made up for with commission. Engineers would probably dislike the ability of the product to sell as a condition of their salary. It's all a question of risk tolerance.

davideous 12y ago

Here's a good article on why Fog Creek does not pay sales commissions: http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ http://blog.fogcreek.com/why-do-we-pay-sales-commissions/ We don't pay sales commissions at my company, and it works well for us. It does help the sales department to work more as a team.

mpdehaan2 12y ago
Love the idea of sales not working on comission, as it also ensures more directness with the customer, and looking after their interest and what products are best for them. I still remember some calls with a software company back in the day and I really liked how they told me when a product wasn't for me, and when I should use the competition. And it was good advice. It increased my loyality to that brand a lot and I shared that story a lot. Plus, you don't get things like the sales people making more than others for closing leads they didn't generate, which isn't a great feeling either. The whole team is responsible for the sale, and the sales guy may or may not have put more sweat into it. Enterprise sales folks making 2-3x what senior engineers make - especially - isn't right - and it happens a lot. Pay should be equal to work expenditure, at risk of sounding somewhat communist. (let's not even start on 8 figure CEO compensation).
kwindla 12y ago
I'd definitely be interested in knowing more about your company, davideous. I have no doubt that not paying commissions can work for some companies. And getting comfortable with paying commissions to salespeople took me, personally, a really long time. (Too long, from the perspective of being a good CEO and doing what needed to be done to move my company forward.) The arguments in the Fog Creek post sound right, and really resonate with those of us who are engineering/product people. But they don't match the reality of my own experience. At least for the high-cost, high-touch, long sales cycle stuff that I have the most experience with, the best salespeople all want their compensation to be heavily weighted towards commissions. So if you want to hire the best sales reps -- and, just as with engineers, you really, really want to hire the best -- you have to recognize and understand that preference. But I'd be happy to be wrong about this! In addition to Fog Creek, I remember reading another blog post about a startup that doesn't pay commissions. Maybe a Foundry Group company: Moz? I can't find that post now, though.
- porker 12y ago
  ThoughtWorks dropped paying commission: http://www.thoughtworks.com/news/zero-commissions http://www.thoughtworks.com/news/zero-commissions
- davideous 12y ago
  We sell enterprise email server software. It's high-touch and sometimes a long sales cycle. Lots of demos of the software via screen-share. Right now we have two people in sales. They are collaborating multiple times a day on Skype and help each other out on basically every sale. Much of your concern seems to be about the ability to hire the best people, given the preference for commissions. I've been fortunate here: I've been able to hire my sales reps through personal connections, based off of reliably knowing their prior performance -- and I know I have really good people. Perhaps it would have been harder to start the sales organization without commissions without these connections. But it's working for us right now.

pbreit 12y ago

Downvote on the first sentence which is incendiary and probably wrong. And even with the edit, you still don't really get that many businesses live and die by sales. Product is relatively easy to build.

angersock 12y ago
"probably wrong" if you are only looking at engineer salaries at the coasts or at BigCo. I very much get that businesses live and die by sales--anybody who's been in a startup (much less founded one) does. But I also get that part of the reason the product sells is because the people working on it are personally invested in the outcome. The engineer trades a somewhat higher salary and lower ceiling for the ability to directly impact how the market and product interact. It's precisely because sales is so important that I am curious if engineers wouldn't be better served (as well as their companies!) were they treated the same as sales folks. The fact is that engineers produce value but don't capture it nearly as well, and I cannot help but wonder what would happen if they worked on commission or royalty.
- berkay 12y ago
  The challenge is measurement. For sales people, it's easier to measure the individual sales, hence you can have commission based on individual performance. For developers it is much harder to measure individual performance. We have implemented commission for developers based on overall sales number. Based on pre-announced targets, developers can get 1x, 2x, 3x salary as a bonus/commission at the end of the year. No caps.

jusben1369 12y ago

Imagine if you as an engineer were told your total compensation was $150,000 per year. But only half of that would be certain. The other $75,000 would be dependent on how many unique features you helped ship in a month/quarter/year and how many of those were bug free. And you didn't have full control over the release cycle - there were a lot of dependencies with other orgs (devops/QA/product management) And as your company grew they could yank you off a feature about to release and put you in a new group where you were just starting to work on a new release. You had to assume that your company wasn't going to screw up and impact your ability to ship. That's at least the right mindset to compare yourself to sales person compensation. And remember, technical sales people can do very well so if it looks more attractive you should think about making the leap.

bcoates 12y ago
Sounds great. It would certainly beggar-thy-neighbor the deadweight over to companies that that give you the same check every two weeks no matter how little you deliver.

jsonne 12y ago

Sales people have much lower base pay and it's made up for with commission. Engineers would probably dislike the ability of the product to sell as a condition of their salary. It's all a question of risk tolerance.