Pros & Cons of Commission-Based Careers
For Employees
In a down economy, commissioned-based jobs remain relatively easy to find. Employers risk little when they bring on commission-based workers. If the employee produces, - well and good. If not, they don’t last long. If you are considering a commission-based job opportunity, it’s a good idea to keep in mind that the advantages of this kind of job are weighted heavily in your employer’s favor. For him it’s all win. For you? Not so much.
Employee Pros:
Commission-based jobs are generally sales jobs. The money can be significantly higher than for a salaried job requiring the same level of education, experience and training. The more you sell, the more you make. You can, if you have a talent for sales, give yourself a pay bump simply by working harder. How much you take home is largely up to you. As a commission-based worker, you generally don’t face a lot of employer hassles about your work style, so long as you’re generating profits for the company. If you make record sales while wearing a clown nose and knee britches, the boss is not likely to complain much.
Employee Cons
You don’t get paid if you don’t produce. You may have nothing to worry about if you are one of those congenital I-love-the-smell-of-order-sheets-in-the-morning kind of people. If you don’t love selling things, however, commissioned-based work can be a soul-destroying ordeal with relatively few financial rewards. Benefits may or may not be included. Vacation time may be treated like a week without pay. If you are new to a commission-based job, it can adversely affect your ability to get credit. If you aren’t successful, your boss may let you hang on till you give up and quit, so you won’t be eligible for unemployment. To succeed at commission-based work, you have to produce constantly. You cannot coast.
Good Idea?
It kind of depends on who you are. If you love sales. If you're like a shark that needs to keep moving in order to keep breathing, then raw commission work may be just what you are looking for in a career.
Shy people need not apply.
If you don't like sales, it's not likely that a commissioned job working for someone else will do more than give you ulcers. Selling is a gift. Not everyone has it. God bless those who do. Their energy drives our economy as much as almost anything else. If you look at the desk in front of you, you will not see a single item resting there that was not sold by someone to someone else.
They're everywhere!
The Commissioned!
For Employers
Pros
A little training money and some non-producing office space is really all the financial risk you take in hiring a commissioned worker. If he doesn’t produce, you can simply hire others and marginalize the poor producer till he quits on her own, saving you the unemployment insurance cost. If she turns out to be a big producer and you have to pay her a lot of money, you don’t mind. The better she does, the better you do. The bigger his wages, the more money you make. The system provides incentives for good producers and consequences for poor ones. You can be sympathetic and supportive either way.
Cons
A commissioned worker’s primary concern is his own bottom line. This makes him focused on short term gains rather than the long term good of the company. Given a choice between closing a lucrative sale now and not pressing the sale in order to nurture a long term relationship that will benefit the company years down the road (but may not benefit the salesman directly at all), the good, effective commissioned worker will nail down the sale every time. Commissioned workers don’t have a reputation for loyalty. Focused on their own bottom line, commissioned workers are more likely to jump ship for a better deal if someone makes them an offer.
Good Idea?
Cheap to acquire, cost-effective to maintain, self-starters who will ditch you in a heartbeat for a better deal. How great is that? The major downside is that you have an employee working for you, who by his very nature, could just as easily bail on you and be your competitor next week. And it's awfully hard to get a high-producing salesman willing to work entirely on commission to sign a non-compete agreement. The good ones know it's just not in their best interests. That's why so many employers go to a base salary with commission strategy, keeping the incentives while giving up some of the advantages to themselves. Sometimes loyalty has to be paid for, but then that's your decision as an employer.
