Going in for an incentive based remuneration system may not work very well if your business is a new one. Employees will recognize that they will have to do bulk of the work of marketing and establishment of goodwill of the business. In such a scenario, they will merely be remunerated for something that they have to do even if they are going to get a fixed salary.
On the face of it, getting higher salary for procuring higher sales may seem like a good thing. However, securing sales for business that already has established its reputation in the market is going to be slightly easier than getting business for a brand new company. In such a scenario, an incentive based remuneration system will work only if it is sufficiently high.
Nine times out of ten, the overall payment works out so high that the employer is better off offering money on a fixed basis. So, when should you move on to an incentive based system? It is advisable to start offering the incentive based system when you hire your third batch of employees.
You should establish your name in the market and should be commanding a certain level of goodwill. This will help your employees bifurcate your business into easy deals and tough to crack nuts amongst themselves. Remember, the lure of high payments for high sales may sound very attractive but people always prefer steady income.
A person working in a small business is not going to have a lot of ambitions. Even if he or she does have ambitions, there will be a lot of work to be done in terms of experience and exposure before the same can be fructified. Not all employees are the same but you will find that only those who have confidence in their abilities prefer the incentive system.