Sales professionals are the driving force of business. Having a well-thought-out sales commission policy can set clear expectations for both the employer and the employee. A good policy can also define when exactly a commission is earned. Although a good commission structure can be a positive employee motivator, also consider incorporating other motivating factors in the workplace such as respecting personal boundaries, clearly illustrating employee value and creating an atmosphere of employee trust and support.
Benefits of having a sales commission policy include improved productivity and increased employee motivation. This can become a routine way to recognize and reward employee achievement. From a company standpoint, the policy can protect the company in legal matters, such as clarifying what an earned commission means and whether payments extend beyond the time of employment.
Advertisement Article continues below this adSales commission policies are as varied as the companies writing them. Policies should be customized according to product type, territory, pricing and sales cycle. Be sure to consider goals that are specific, measurable, attainable, realistic and timely. Decide whether employees are to be paid when the sale closes or when payment is received. This is a good venue to cover rewards in consideration with termination policies. If there is clear communication beforehand about whether commissions are to be paid after an employee has terminated employment, there should be less confusion and therefore the probability of fewer complaints and/or lawsuits.
The level of commission can be based on a product valuation as well as sales goals met on a daily, weekly or monthly basis. Having well-defined goals and clear communication will increase employee motivation. Decide if employees will be paid when the sale closes or when payment is received. Utilize and consider knowledge of competitors' policies. It is important to build the policy and the business to attract top talent. With correct staff in place, it will be easier to grow the business. If you are struggling with creating a highly effective, motivating sales commission policy, consider hiring a professional consultant. It is of the utmost importance to ensure the policy is one that motivates staff. An additional step to ensure the new policy becomes effective is to coach employees so that they can achieve set goals.
Advertisement Article continues below this adKnow your state's laws about sales commission payments and whether or not employees are granted commissions after termination. Ensure sales commission guidelines are achievable. If not, this can be demoralizing to the staff. Although you are protecting your business, ensure the policy is employee centric, motivating staff and providing clear communication. Without clearly expressed guidelines, disputes may be taken to court.