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help on commission structures
Benefits & Compensation
help on commission structures
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We are an IT services provider. Our Sales people get the accounts and then handover to the development team. We want to create a commission policy for them. We pay them the base pay as well and want t
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Forums » Topic Forums » Benefits & Compensation » help on commission structures
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help on commission structures
posted at 5/17/2010 9:11 AM EDT
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Posts: 1
First: 5/17/2010 Last: 5/17/2010 |
We are an IT services provider. Our Sales people get the accounts and then handover to the development team. We want to create a commission policy for them. We pay them the base pay as well and want to continue doing that plus a commission for the services they provide. Can some body share with me what are the commission structures on top of the base pay that the companies are following. If somebody can send me there best practices or commission structure for IT Sales. Also do we pay the commission upfront or do we space that? |
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help on commission structures
posted at 5/17/2010 9:53 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
You might be better served by sourcing a sales comp consultant to design a plan. Sales comp can be tricky just in the mechanisms of it, but more importantly it's an opportunity to direct the growth of you business in desired directions. For example, you could certainly pay a percentage of revenue for closing a deal, but you can provide further rewards for achieving a gross profit margin target, specific companies in certain sectors, and accelerated commissions for meeting sales targets. |
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help on commission structures
posted at 6/22/2010 3:02 PM EDT
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Posts: 1
First: 6/22/2010 Last: 6/22/2010 |
We have a structure which would give sales reps opportunity to earn commissions in different ways. A percentage of quarterly new sales, a percentage of sales increase yearly, and incentive pay when they reach certain goal (group incentive or individual incentive). I think commission gets paid after the sales closed and made could drive your sales rep.s more than you pay upfront as a commission pool then draw back if the rep. fails to reach certain # (guess that's how car dealerships do). |
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help on commission structures
posted at 6/22/2010 4:09 PM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I would strongly consider your clawback provisions vs payout over time. (Clawback provisions are harder to enforce if there is nothing to subtract the commission from and can often fall afoul of state wage laws. Some states require you to go to small claims court to retrieve the money...and even if you get a judgement for the employer, then you have to figure out how to collect it.) Payout over time has a bit of retention advantage.
I know many small IT firms that have gotten burnt by paying out commissions on signed contracts that have later been withdrawn. Yes, you want to incentivize sales employees, but you want them to be solid sales. I would look at the history in your firm for deals made but not completed. And I know lots of corporations who used to do outside IT contracts with consulting firms that are paying the penalty to get out just to cut bottom line expenses. Especially in this economy. |
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