[ArnoVW]

One exception, for sales. I don't see how they could have done it differently.

We have a "one rate per level" rule. The rates are published, and so are the definitions of the levels, and everyone's level (i.e. indirectly you can know everyone's salary)

Worked great, untill we started to look for sales. Doesn't work. They only know incentive-based schemes.

So now they have an incentive-based scheme just for the sales, which is (essentially) budgetted from their stock-option package (that everyone gets). I.e. they benefit from growth a little bit earlier and directer.

If we hadn't done that, we wouldn't have a sales department.

[abxyz]

I argued this in the previous discussion about oxide’s compensation structure: I disagree that sales must be commission based. Yes, finding sales staff that are willing to work for a salary and equity shrinks the pool but the same is true of engineers willing to work for a flat rate across the company.

Sales might seem mystical and magical to engineers but it isn’t. A small company with a small sales team can absolutely work without commission. Yes, it is harder, but it is not impossible. The carve out for sales undermines the ideas behind a flat salary structure. Just because we can measure a sales person’s contributions in dollar amounts does not mean we must measure it in dollar amounts. Sales is as much about the partnerships between sales people and product/engineering, why aren’t all the people who work on a deal getting commission?

I’d go as far as to argue that oxide is in the perfect position as a big-ticket long-cycle business to abandon traditional sales commission structures. They take on all the negatives (sales people overselling to get commission) with no benefits. There are other ideas. Company wide bonus based on sales made during the year?

[yencabulator]

> Just because we can measure a sales person’s contributions in dollar amounts does not mean we must measure it in dollar amounts.

I don't even know if we can.

Yes, you can measure the number of deals signed they called dibs on. But:

1. You don't know if the salesperson earned it, or the whole product. There's a baseline demand driven by the whole company. This is the whole old argument that nobody can prove that ads work; you just can't pinpoint the purchase decision to exposure to an ad. So yeah I guess you can make your salespeople compete against each other and reward the one who stochastically floats to the top while punishing others. Sounds like such a fun workplace, I thought everyone agreed Microsoft's rank system sucked.

2. Several times I have witnessed salespeople selling non-existent, non-planned, functionality and forcing the rest of the company into crunch mode to not have a major client semi-publicly end the contract early. You're often just rewarding the biggest liar while everyone else has to cover up for their shit. Once again, sounds like such a fun workplace.

It comes down to, competitive sales is a cancer, and you're choosing to have it.

[tock]

> Just because we can measure a sales person’s contributions in dollar amounts does not mean we must measure it in dollar amounts.

This is the fairest form of compensation. It's unfortunate that engineering contribution cannot be measured the same way. If we could engineers would all be getting a nice pay hike.

[tshaddox]

It's still just a market. You've got to make offers that people will accept. It's mostly silly to try to come up with some objective theory of value, except in the context of what potential employees will consider to be fair, which is right back at "you've got to make offers that people will accept."

Basing compensation on supposedly objective things like "the dollar amount a sales person brought in" might be important to a given pool of potential employees, but resist the temptation to think of it as objectively determining the value of the employee's work. Remember that all you're doing is making offers that people will accept.

[tock]

I agree. But if employees know their objective value I believe it will change what they will consider an acceptable offer.

[yencabulator]

Only if the salesperson also implements & supports the things they sell. Selling false promises of something the rest of the organization has to fulfill is not fair -- but that's the way to the biggest commission!

[ghaff]

And many would be getting let go because they weren't meeting some number.

[tock]

Companies already do layoffs without commissions. They are always optimising to reduce salaries and increase profit margins. And its not "some number". Its the amount of $ brought in. Thats what companies care about.

[ghaff]

Yes, but sales reps have very specific targets and sales managers have no problem routinely letting people go if they miss those targets. It really is a somewhat different situation from engineering--although projects, for example, certainly get canceled and teams let go. There's a more direct correlation to quarterly revenue/margin input in the case of sales.

[tock]

But its a more transparent system. Right now no-one has any idea if they get laid off or if they are being underpaid. I think the overall compensation would likely go up if you are good at your job.

[ekianjo]

> One exception, for sales.

either you have a rule or you dont. the moment you start to do exceptions this will call for more down the road.

there is tangible reason for sales to be commision based. you could say its just like another regular position. An engineer can also be a sales multiplier if they improve a product yet they dont get a commission. Same thing. Having boots of the field is no justification.