In the March edition, we asked the questions: Are commissions the best way to motivate our employees? And are commissions there to drive quality or quantity of sales activities? At the end of the article, I asked for feedback and comments, and as of April 30, we have received about 30 responses from readers. We can summarize the overwhelming consensus this way: “Commissions are in place to drive the quality of selling activity, but the plan may not be working the way we had hoped.”
As part of our follow-up, we did deep dives with nearly two dozen distributors, in four lines of trade (HVACR, industrial, electrical and automation, and building supplies). Clearly, distributors are struggling to get to a compensation plan that drives the right behaviors. And thoughts on commission extended past outside sales. We saw models for inside sales, customer service representatives, product specialists and a few others. They all had three things in common: driving behavior, providing motivation and not working exactly as planned. But we did run into noncommission-based plans that appear to be functioning quite well. Let’s talk about one of these.