Is a retailer's turnover a fair way of basing manager's salary?

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Chicken Boo

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And if it is, what is a fair percentage? (for example, if the shop turns over R100k a month, is R10k a reasonable manager's salary)
This is for the single highest position (general) manager, not any subs.
 
No

It all depends on profit margins. Most managers in retail are offered profit incentives. I was a manager at a bed store and earned an average of 15% of turnover but when I was a manager of an IT retail store I would say my salary was 3% of turnover.

EDIT: R10K pm for R100K turnover? This would not be feasible if there where still staff, rent & overheads. Different story if it where a business that was service based as then base costs are much lower. Without even knowing the nature of the business I would say more like R5K, for R10K the store would need to do more than R200K per month.
 
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Agreed.Profit is the main criteria.You could also have a retailer doing R60k a month at a profit of 500% which leaves a whopping R50k for overheads.A manager could easily command R5k-R10k from this.
Turnover means nothing if you're not commanding good profits from your sales.
 
Performance management 101: Don't me link it to something the person can't control.

Revenue center -> Link to turnover
Profit center -> Link to profit
Investment center -> Link to ROI

In this case it'll qualify as either a revenue center or profit center...not enough info to say which. Read up on wikipedia to work out which it is.

If its a very flat corp structure (doesn't sound like it tbh) then 10k might be OK.
 
It depends. Generally neither profit nor turnover are a good base.

The most appropriate measure to look at is operating profit as this excludes non-operating expenses. Operating profit shows how well the business operations have performed and thus are a good measure of managers performance. This is assuming that the manager has no control over non-operating expenses while he does have control over operation expenses.
 
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