Friday, January 23, 2009

Salary Or Commission Which Is Better

Writen by Claude Whitacre

Years ago, I had a conversation with a friend who was thinking of getting a job in sales. He asked me which I thought was better, Salary or Commission. This was my answer.

"Here's what a salary is: an agreement between you & your employer that they will pay you a certain sum per hour. Let's say $10 an hour. Your work will make your employer much more than $10 an hour, or you'll lose your job. So the agreement is; Your employer will pay you the FIRST $10 an hour that you earn for him. and he keeps the rest." Friend- What do you mean 'The rest'?"
Me- "If you get paid $10 an hour, but you generate less than $10 an hour in profits to your employer, how long do you keep your job?"
Friend- "Not long, I guess"
Me- "Right, in fact most employers make a multiple of your salary off your results. They have to, if they want the business to grow"
Friend "That almost seems unfair"
Me-" Actually, it's completely fair. If you agree to work for a specific amount & they give it to you, how can it be 'unfair'?"
Friend- "So what's so great about commission?"
Me- " This, You know the employer that pays you $10 an hour? He's on commission. Every CEO of a company, every self-employed person, every farmer, every landlord, almost every wealthy person in the world works on the profits of their work, we call it a commission"
Friend-"You make commission sound better"
Me-"It is better. You ever hear of someone getting promoted to 'Partner' in a business?"
Me-" The person was making a salary. When they become a partner, they now get a share of the company's profits; A 'Commission'. Commission is a Promotion. Commission is more"

That ended the conversation. It would make a better story if I knew what happened to my friend. I really don't know. We lost touch after that. But years later my Brother-in-Law asked me where I was employed.
I said "I'm not employed"
He said "You don't have a job?"
Me-"No, I have eight employees. They have jobs. I have a Company" That felt pretty good.

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