What are the suggested compensation approaches for a non-founder Sales Manager?

What are the suggested compensation approaches for a non-founder Sales Manager, who will potentially become the sales director and be leading the sales team as the business evolves?

The first MVP of my startup SaaS solution is getting ready to be released to “selected customers”(AKA early adopters) on the next 30 days. It is a B2B  focused solution planned to be global/multicountry. Still on bootstraping phase. The company has capital to run fine for the next 3 years.  Having somebody focused on the Sales strategy, pricing, materials, etc seems be important at this point.

The best candidate to be the sales manager is a senior sales executive who  has lots of experience selling software solutions. At least until June 2016  he will not be able to leave his current job (due to contract$ reasons), both sides does not see a issue on that at this stage. Because of that I am considering to propose a 100% variable compensation until he joins full time, and once he joins full time, propose a 100% variable +  some equity to be given proportionally during the next 2 to 3 years. By that time, he may end up investing some of his money as an investor if things work well.

Any suggestions, lessons learned, advice are welcome.

  • If he can’t come on board for another year and a half, and he’s fine with this, then he’s clearly hedging his bets. If your business becomes successful he hopes to become a director, and if you fail then that hasn’t really cost him anything.

    So variable compensation or stock options (that will only start to vest after he joins fulltime) are the way to go. He may be a senior executive, but he’ll still have to prove himself.

    Make sure you don’t invest too much time into somebody who may not be as into your business as you think. Sales people are good at selling themselves, after all.

  • “At least until June 2016 he will not be able to leave his current job”

    Then find someone else. Someone who gets out of his comfy zone and actually deserves to get equity.

    In 1 year a lot can happen and it is my understanding that you need someone right now? Do you want to waste 1 year? How are you explaining that to investors?

  • At this stage you need a sales producer rather than a sales manager – and from your description, 1099 contractor(s) are a consideration. Keep your equity, offer a straightforward (no calculator needed) incentive plan, and require prospecting activity to be documented daily. When you identify those who can both produce results and are a cultural fit, offer a monthly draw against commission in exchange for a full time commitment. And if you can find a leader among that group, a salary, bonus plan, and equity would be reasonable in exchange for their value.

  • I would not hire somebody to be a Sales Manager if they were not willing to make the jump. You need more than a person who is going to work for you part time, you need somebody who is going to commit to you and the brand, who can meet clients when needed, who is vested in the company because they believe, not because they are safe in their other job.

    You can find somebody who is willing to give you what you need. Take your time and don’t rush into this decision.

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