Question

Topic: Strategy

Transitioning From Base Salary To Draw

Posted by Anonymous on 12/5/2008 at 9:48 AM ET 25 Points
We are about to transition from paying a base salary to our sales personnel to paying a draw against commission as of Jan 1. We plan on paying the regular 10% commisssion on sales made before Jan 1 and start to pay the increased commission on sales generated after Jan 1. Commission generated from the post Jan 1 sales will not be paid until March or April. Since the sales personnel are accustomed to receiving their base + Commission and come Jan 1 they would be receiving a draw against commission, what would be the fairest way to implement this transition?
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by CarolBlaha on 12/5/2008 at 10:01 AM Member
    I question why you'll hold commissions generated in Jan to March or April? First, you need to give them an exact date when they are paid, not March or "maybe" April. Expecting people to live off less money till then is going to meet resistance (to be kind). I maintain a manufacturer rep agency and my commisions generated in Jan are paid mid Feb. What is the reason for the lag? The agency is 100% commission.

    I hope you have already sat with staff and explained the new comp plan with examples of what it means to them. I would show them in your examples this is favorable to the sales staff.

    Why is there a change in plan? Are the people paying for themselves and a profit center for the company? When you make a change like this you should explain the reasoning and be candid and transparent.

    Sell Well and Prosper tm
  • Posted by CarolBlaha on 12/5/2008 at 10:23 AM Member
    So then you aren't paying on invoicing but on payment. (no one pays on booking obviously)

    If everyone is happy with it, your question is handling the 3 month lag until commissions start rolling again.

    The fair way is to make it gradual. Reduce the base in incremental amounts. You can also do a draw against future commission. Its exactly how companies train new salespeople-- starting them with a base then weaning them to another plan.
  • Posted by telemoxie on 12/5/2008 at 12:35 PM Accepted
    It certainly sounds as though you're trying to maintain an excellent relationship with your sales staff.

    Carroll's advice sounds good to me, but I would add that everyone's financial situation is unique. I would expect that a program which helps 80 to 90% of your sales staff might possibly cause great difficulty to one or two folk. It might be best if you could find a way to have some flexibility for unusual circumstances over the next several months.

    Good luck to you.
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Strategy)