Notes From Readers: Reader Defends Salaried Plan
June 1, 1996
I'm the creator of the salaried compensation system mentioned in "From Commissions to Salaries: Realty USA's Experiment One Year Later" (TR Inc., April 1996, page TR6). I think Joseph Silvey makes some excellent points about the pitfalls of paying salaries.
But it's not the payment of salaries that's the problem. It's the way salaries are paid and to whom they're paid. Under my compensation system, I don't pay salaries to incompetent salespeople because I don't tolerate incompetent salespeople.
Unfortunately, in Australia and the United States, most real estate salespeople are, by my standards, incompetent.
I began "experimenting" with salaries in the mid-1980s. I made many errors, but by the late '80s, I had a team of four salespeople who averaged more than 20 sales---or 40 units---per month. All my salespeople are salaried. And although consumers in Australia typically pay about 3 percent commission on a home sale, my salespeople each earned an average of AU$173,968, or about U.S.$137,469, the last half of 1995.
The system took nine years to develop. The key is to take people with no experience and spend several months training them before they begin. We include intensive exams and a three-month trial period.
Your headline includes a dangerous word: experiment. This is no experiment. It's a proven method that takes much learning and much dedication.
Fortunately, it's worth it. Our managers earn up to 10 times what "normal" managers earn. And their salespeople produce up to five times the national average.—Neil Jenman, President, Jenman Group, Castle Hill, New South Wales, Australia
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