Commissionary Definition:

Commissionary, in the context of employment, refers to a compensation structure where employees receive a percentage-based incentive or commission on the sales or revenue they generate. This model is commonly applied in sales-driven roles, motivating employees to contribute actively to the financial success of the organization.

Key Features of Commissionary:

  • Performance-Driven Compensation: The commissionary system ties compensation directly to individual or team performance, creating a direct correlation between effort, sales, and financial rewards.
  • Variable Income: Unlike fixed salaries, commissionary structures introduce variability to an employee’s income, providing the potential for higher earnings based on sales achievements.

How Does Commissionary Work:

The commissionary model operates by establishing a predetermined percentage or rate that employees earn on the sales they generate. Sales professionals, such as those in retail, real estate, or business development, often thrive in environments where their efforts directly impact their earnings. The calculation is typically based on the total sales value or revenue generated.

Best Practices of Commissionary:

  • Transparent Commission Structures: Employers should ensure that commission structures are transparent and clearly communicated to employees, fostering trust and understanding.
  • Regular Performance Reviews: Regular performance reviews help align employee goals with organizational objectives, allowing for adjustments to commissionary structures based on evolving business priorities.


Commissionary structures are most commonly applied to roles directly involved in sales or revenue generation. However, some organizations may extend commissionary incentives to other roles based on performance metrics tied to business objectives.

The frequency of commission payments varies by organization. Some pay commissions monthly, while others may choose a quarterly or annual schedule. Clear communication on payment timelines is essential.

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