Lease Employee Salaries: How Much Is Enough?

Adequate compensation of lease sales personnel is the most important factor in obtaining and retaining qualified employees. Yet, compensation is one area in which many leasing companies operate in a void, not knowing exactly what other companies are paying. In an attempt to give an overall view of the topic of compensation, a panel on the subject was conducted at the Car and Truck Renting and Leasing Association Convention in San Francisco.

The panel, lead by Sidney Rose, administrative secretary for the American Automotive Leasing Association (AALA), included William Paetzhold of American Leasing and Jack Taylor of Executive Leasing.

In outlining the requirements for a good lease salesperson, Paetzhold explained that this employee must be versed in many different areas. “A lease salesperson must not only sell, but also make collections, handle paperwork and be a general transportation counsel for his client.” In addition, this employee must be able to communicate and deal with finance companies, insurance people, car dealers and banks and to speak with some authority in these areas. “He must be the kind of person who is able to contact these people, draw on their expertise and build a complete lease rate.” The qualified lease salesperson’s expertise should not stop there, Paetzhold added. “He must also have a better-than-average knowledge of used cars.”

When hiring new personnel, Paetzhold said, it is important to remember that prospective employees fall into four general categories, and that these people should be compensated accordingly. These categories are: (1) college educated, but no prior business experience; (2) prior business experience, but no lease sales experience; (3) experience in sales, but no lease sales experience, and (4) extensive lease background.

Base salary for the first category, according to Paetzhold, should be $750 to $800 per month plus commission. The second group should draw between $800 and $1,200 per month and the third category should be in the $1,000 to $1,300 per month bracket. Experienced lease salespersons in the fourth category should be paid between $1,200 and $1,500 per month plus commission.

In addition to commissions, other compensation can include such items as company cars, gas, oil, expense accounts and other fringe benefits. In the area of commissions, Paetzhold gives $1.50 per month per car lease and three dollars per month per truck lease. Salaries and performance of new personnel are reviewed after six months, while more established employees have annual evaluations.

In outlining his compensation program at Executive Leasing, Jack Taylor said his firm has found success in offering bonuses and profit sharing in addition to the usual compensation. “It gets people involved and interested in the business,” he explained. “It makes them feel they’re more than just salesmen.”

As part of the program, Taylor said, his company arranges sales meetings in resort areas, making the bonus-award program part of the proceedings.

As indicated in the accompanying chart, account managers (salespersons) all have a base salary of $4,800 per year. Their commissions, which average $60 per car, are on a scale from $9,600 per year for 100 units delivered up to $27,600 for 400 units. In addition, they are given bonuses based on the volume of units delivered.

These volume bonuses range from $500 for 150 units delivered up to $7,500 for 400 units. As a result, total salaries range from $14,400, which is base salary plus commission for 100 units, up to $39,900, which includes base, commission and the top bonus for 400 units.

After the sales person has been with the company for a time, he may be promoted to senior account manager. The commission and bonus scale is basically the same, but the base salary is higher at $6,000 per year. This higher base boosts the overall compensation from a low of $15,000 at 100 units to $41,100 for 400 units per year. Senior account managers are also eligible for several other fringe benefits such as the trip to the annual sales meeting, country club membership and entitlement to a half-day off during the week when working Saturdays.

Other salaries within the organization, from those of vice president and branch manager to department manager and computer operator, are also charted here. Company cars are assigned to those at or above the level of branch manager.

In concluding the session, Sidney Rose summarized a compensation survey of several AALA-member leasing companies. One leasing company in the 60,000-car range pays the average salesperson $32,000 per year, Rose reported. Overall, most account executives are in the $18,000 to $20,000 per year bracket. In addition to adequate compensation, Rose stressed the need for proper training “to get salesmen to do the best possible job in our industry.”

GENERAL MANAGEMENT SCALE

Account Manager’s

Compensation & Bonus Plan

Senior Account Manager’s *

Compensation & Bonus Plan

* minimum 100 units per month plus some management duties.