Question

Topic: Career/Training

How To Set Commission Plan For Retail Shop Manager

Posted by ziczacxann21 on 9/29/2011 at 3:07 AM ET 250 Points
I am going to promote one of my retail sales assistants to become "retail shop manager"

I would like to ask the opinion of everyone about how I should set a commission plan ....

I was thinking to give the "retail shop manager" a commission for the sales that are personally made by him, and an additional bonus commission for sales made by the sales assistants in the shop.

In the past he has been performing very well, in fact he is a super salesman. Now that he's going to be manager, I guess he should be rewarded for the performance of his assistants too.

And what about the sales assistants? I was thinking to give them commissions for the sales done by themself, and a bonus commission if the total sales of this shop exceeds a target.

Can anyone share with me some ideas/experiences?
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RESPONSES

  • Posted on 9/29/2011 at 6:39 AM Accepted
    Why would you take a great salesman and give him management responsibilities? Do you really want him to spend his time doing something other than what he does best? Do you want him cherry-picking the best prospects for himself and leaving other salespeople to scramble for the crumbs?

    Also, if the new job is really management then sales may not be the ultimate metric for compensation. Maybe it's store profitability, talent development, low personnel turnover, etc.

    Consider what you want the result to be and compensate your manager on how well he meets or exceeds your expectations.
  • Posted by ziczacxann21 on 9/29/2011 at 9:32 AM Author
    This salesman has been working as my shop's frontline sales assistant for 3 years already. He has been producing good sales results, and he's active and responsible. I felt its time to promote him, to let him manage the shop, while I move on and start to open another shop. I just hope while I'm busy opening a new branch he will take care of this shop and continue to grow the sales.
  • Posted by michael on 9/29/2011 at 11:42 AM Accepted
    Does he WANT to "manage". You might be better off giving him a salary bump for helping others and letting him keep his commission.



    Michael
  • Posted by Peter (henna gaijin) on 9/29/2011 at 12:01 PM Accepted
    When I read the question, I also thought about what others have said related to promoting. It does happen often that you take someone who was real good at one thing and promote them to another, only for them to fail at that. Worth a thought, but doesn't mean your decision to promote is a bad one.

    On commission, you should always be careful about what you compensate someone on, as they will work to make sure that happens, but sometimes at the cost of other things important to the business.

    For example, if as a store manager he has authority to discount, and your commission only pays based on sales at the store, he may be tempted to discount more to increase sales. This helps him, but not store profitability.

    The basic thought is think what you want him to be working on. If only increasing sales, then base it on sales. if on running a business and making it profitable, then that.

    So, assuming you do provide him with the authority and information to more or less run the store as a business, I would give a bonus based on percent of profit or some similar number, rather than sales commission. Probably not give commission based on other sales rep's sales, and maybe not even on his sales.


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