I wrote a blog a recently about commission only pay structures, and how they can kill a company. I would like to augment that blog with a scenario that I have actually used that did not come to mind at the time. I was reminded of it while conducting an interview with a candidate today. There is actually one way, in my humble opinion, commission only can work. Sales people deserve two things in regards to their compensation. First, they deserve realistic goals and obtainable objectives in order to meet the promised compensation. The other is the ability to meet those objectives. The ability is not totally on the sales person. There has to be a need/desire for the product or service being sold, and the ability of the company to produce that product or service as advertised. Sales people can often be caught in situations where they are selling “vapor-ware” in hopes that when the delivery date hits, the product is ready to ship. This is often not the case and because there is no revenue, there is no commission. That all stated, one thing I have done in the past is take an existing base plus commission structure and convert it into a commission only structure. To make this transition work, I offered two separate paychecks on payday. One was the original base plus commission pay, and the other was what they would have made in a commission only structure. The latter was obviously more. I ran this “game” for up to three months to demonstrate to the entire sales team that the company was doing their part. In every case, the salespeople came to me to ask to be put on a commission only pay structure. The lesson is that over time, doing exactly what they would normally do, the salespeople saw that they could earn more money by running a commission only structure. Now if they did not continue to pull their proverbial weight, they would make a lot less. However, it was up to them at that point. The company had proven that they had a real product or service, and proven that there was a need or desire for it. It was then all on the salesperson’s shoulders to do their job. So I will recant my statement that ALL commission only is bad. A structured program that is proven out by the company and also by the efforts of the salespeople can actually be a strong motivator. My advice to you is to run your existing pay structure and the commission only one simultaneously and see what YOUR salespeople pick.
When Commission Only Actually Works!
