imageBy John R. Giovannone

We feel your pain, and we have a prescription for you to consider: a non-accountable expense reimbursement plan.

First, let’s discuss your problem. If you have a salesforce, the force exists to sell stuff. So here’s an exercise:

  • First, think of your entire outside salesforce.
  • Then, mentally separate out those salespeople who are best at selling stuff.
  • With this most effective group in mind, ask yourself, what does each person need to maintain his or her success?

Many of you, if truth be told, have no idea. You just want your good salespeople to keep doing … whatever it is that they’re doing … because, well, it’s working.

Effective sales people come in all forms and use all manner of methods: some wine and dine; others live on the phone; others rely heavily on encyclopedic product knowledge; others employ advanced statistics and analytics; some value regular face time with customers; others blur the line between their business and social lives; some might superstitiously choose to meet customers only at a favorite coffee shop; still others have forged such reliable customer bonds that their book of business sells itself with minimal maintenance.

What’s clear is that not all effective sales people do the same things—or incur the same expenses. But the last thing you want is for your expense reimbursement policy to crimp sales by stifling effective sales activities.

The Labor Commissioner, discussed here, has recognized the futility in guessing why or how sales are made. Outside salespeople, by definition, tend to do their own thing out in field; they “set their own time, and they’re on the road, they call on their customers[, in fact,] rarely do you know what they are doing. . . .” DLSE Op. Ltr. (September 8, 1998).

And while we don’t know precisely how salespeople sell, we can tell whether they’re selling by looking at their bottom line. If it takes a $300 concert ticket to make a $100,000 sale, that’s typically an acceptable return on investment. The trite quote is that it takes money to make money. If the results justify the expenses, who can question the seller’s methods? F. Ross Johnson (as played by James Garner in Barbarians at the Gate) had his own reaction to the second-guessing of expenses: “Every penny you think I’m [umsneezing] away here, comes back to us dressed up like a nickel!”
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In addition to the numerous and often mind-numbing requirements placed upon employers in the Golden State, Labor Code Section 2802 requires that an employer “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”  The most common employee