Why Commission-Only Sales Roles Are Hurting Your Business
There has long been a troubling trend in the business world: hiring salespeople as commission-only, independent contractors. After more than 30 years in sales, having experienced nearly every type of compensation structure, including high-commission roles, I can confidently say that commission-only sales positions are not only flawed but also potentially harmful to a company’s long-term success.
Sales professionals are often treated differently from every other department in a business. Unlike accounting, IT, HR, or warehouse staff, salespeople are frequently expected to take on all the risk, without the support or respect that comes from being a salaried employee. This sends a clear and damaging message: "You’re not valuable enough to be on the payroll."
This is not a call for lower performance expectations. On the contrary, I believe strongly in accountability. That accountability should be applied across the board, not just to sales. Ask yourself: Would you ever offer your accountant, IT technician, or HR manager a commission-only role? Of course not. Yet these departments, while vital, do not generate revenue. Sales do. So why is the sales team the only group expected to work without guaranteed pay?
The logic of “they don’t cost me unless they sell” is short-sighted. Talented, experienced salespeople won’t accept commission-only offers; they know their worth and expect to be paid for it. When you hire commission-only, you often end up with less-qualified candidates. You invest time and resources into posting jobs, interviewing, onboarding, and product training—only to hand your brand’s first impression over to someone who may not succeed. Worse, you might not even realize how many potential customers are lost due to ineffective sales reps.
There are also serious legal considerations. The IRS, Department of Labor, and various states have specific guidelines for classifying workers as employees (W-2) or independent contractors (1099). True independent contractors must operate autonomously. You can’t dictate their schedules, require them to attend meetings, or provide them with office space or equipment. If you do, they must be classified—and paid—as employees.
When sales reps are treated as independent contractors, they act accordingly. They’re not loyal to your company; they’re loyal to whoever pays them fastest. In one company I worked with, the entire sales force was commission-only. They couldn’t even hold regular pipeline meetings because doing so would violate contractor regulations. Without accountability or visibility, forecasting was impossible.
If you want real sales performance, hire professional salespeople—and pay them like professionals. Before hiring, ask yourself:
Are salespeople less deserving of employment than HR or IT staff?
Do you know how to identify the right sales candidates in an interview?
How critical are sales to your company’s success?
How much revenue are you losing due to poor hiring choices?
What’s the impact of an ineffective sales team on your brand’s reputation?
Can someone with no financial tie to your company truly have your best interests in mind?
In conclusion, relying on commission-only salespeople is a gamble you can’t afford. Just because it’s "free" until they sell doesn’t mean it’s without cost—missed opportunities, lost customers, and damaged reputations are expensive consequences. Treat your sales team like the valuable contributors they are. Hire wisely, invest in talent, and compensate fairly. Your company’s future depends on it.
