New Commission Structure - Hindsight and Foresight

My thoughts about my company's new commission structure.

This post regards the new commission structure and its failure to provide employees any type of commission in certain conditions.

Yes, we all know that we are underpaid. Per Hour, my guys make less than the Shoe Store next door! In the old commission structure the manager can award individuals based on total sales and performance. In the new commission structure we are faced with some sort of "Flat-Tax" rate that does not account for traffic driven to the store and/or any metrics remotely resembling any logical statistical models. It seems almost like picking numbers out of thin air. This type of commission structure assumes that all stores have the same traffic in which all sales people are able to acheive same the minimum commissionable margin amount. It does not account for region, traffic, or seasons. Here is where the fallacy lies.

We have a store goal to meet. Perhaps the margin goal is $39,000 in your store. You have 3 full-time sales employees (3 * $6,500 = $19,500) and you have 2 part-time sales employees (2 * $4,000 = $8,000). This amounts to $27,500. This gives a difference of $11,500 which is almost 2 additional full-time employees in minimum margin amount. If the individual cannot attain the minimum sales margin or more, is it prudent to replace the sales person with another individual that you have to then again train and invest time? What kind of worth are we trying to convey to our employees? That they are dispensible? If the employee achieves only minimum sales margain amount we still punish them for working so hard to achieve it and we have $0 to show for them at the end of the month. Even our technicians, when they meet the minimum tech revenue shows for considerable amount of incentive on their paycheck. We award inventory control points to the technician whereas the sales people do just as much work to keep inventory control at bay...yet we ONLY award the technician.

It is good business practice to maximize sales and profit. This I understand. But is it good business practice to turn over employees as frequently as we change our undershorts? What value do we put in our employees if we hold them to metrics they cannot attain in which they see no incentive and holds a job that only pays minimum wage? What loyalty do we instill in our employees to maintian their work ethic and motivation if we provide them a minimum wage with no incentives? This makes them only want to work less and to continue search for another job because it seems that this company does not value its employees. We can spout out that benefits are great, indeed they are great, however what matters is the amount of money we receive in our pockets at the end of the day to pay our bills. I'm sure that some employees will sacrifice some benefits to earn more on their paycheck.

What we can do instead, to motivate our salespersons, is to set the minimum commissionable margin amount that is suitable according to previous margin numbers. Perhaps take the mean of 3 months, set that as the goal and use the standard deviation added to the mean to model High Goal. Set minimum margain amounts according to their status by dividing the margin goal amount between FTE count. If we can do this and consistently provide some sort of incentive to our sales people we can see morale boost and the willingness to improve individually as an employee and as a salesperson. Not to mention, an attainable goal to earn commission for our employees. If we continue to keep our sales people down through unrealistic goals and show no incentive we will continue down this continuous spiral of employees using this job as a means to find another job in the process. Continuity of employees is a big factor, as a familiar face in a store provides the customer a welcome experience and comfortability which not CompUSA nor Best Buy can compare. How many of our customers know our sales associates by name whereas walking into CompUSA we have no idea one guy from the next. Let's keep this in mind and see what we can do for our employees.