Basic salaries in sales – the age old debate but has the credit crunch changed things?

It’s the age-old debate, low basic vs high basic and the correlation between sales hunger, drive and activity levels. Some of the Sales Directors we support passionately believe that low basic salaries but strong commission structures are the answer to deliver great team results. Others believe that low basics deliver negative pressures and sometimes compromising, short-term sales behaviour. Who are we to dictate what is right or wrong for an organisation but recent social and economic developments have made low basic salary hiring much more difficult in our opinion.

House prices continue to rise and since the credit crunch, lending criteria for securing a mortgage has tightened. This is “high on the agenda” of sales professionals concerns in today’s world. If basic salaries are very low, mortgage availability is compromised, and if they do own their own home, becoming mortgage prisoners in their current circumstance becomes a worry.  Many would naturally enjoy the thrill of the chase and the higher reward vs a lower basic, but we notice that the head must rule the heart when making decisions about what roles to pursue.

Gone are the days where borrowing could equal up to 4.5 x overall income; now, interest stress tests, stability in role, guaranteed income are much more important in terms of lending criteria. Therefore, if an organisation is adamant that a low basic salary is the policy they will maintain, they should expect it to limit the pool of candidates that will be available to them. This is a developing space and it’s our belief that organisations should keep this under review.