Commission paid once per year? That’s a new one on me!
Posted by Geoff Alexander on Mon, Apr 12, 2010 @ 10:01 AM
In my telesales training classes, reps tend to crab a bit sometimes about company policies. Often, these are about how Marketing could do a better job getting them leads, or how cumbersome the CRM is to use. I tell them that I've yet to see a company whose sales reps didn't have the same concerns, and these generally are the result of a red hot company growing real fast, fast enough to easily outgrow systems that would have been adequate if the company were not growing at all. In other words, hot companies have growth challenges, while failing companies don't. My recommendations are to do a better job with the leads you have, and leave the CRM headaches to someone else (I remember the days of keeping prospect info on 3x5 cards, so any CRM is a joy, compared with that). And, as just about all of us in high tech telesales know, change is constant, and embracing change is a big part of what makes superior reps superior.
Last year, several pay practices that drew complaints did cause me to raise an eyebrow, although these came from companies outside my customer base. One concern was the practice of paying reps commissions quarterly instead of monthly, and I blogged about this, because it has the opposite effect of motivating sales people to close sales fast, which is one reason I'd like companies adhering to this practice to rethink it.
Recently a blog subscriber of mine encountered a new one that I hadn't yet heard of, and it's being offered to Managers who are interviewing for sales management jobs. If you're a rep, it's worth reading this as well, because payment packages do have a way of eventually filtering down to the rep level. This individual was offered a decent yearly base, but would have to wait a year to collect the accrued commission. The benefit to the individual would be a huge commission check at the end of the year. What are some of the drawbacks? Here are the first few that come to mind:
1) If the individual leaves the company before a year elapses, he or she gets zero commission.
2) The individual can only leave the company within 30 days or so after haven received the commission check, in any subsequent year. Otherwise, again, any accrued commission will be forfeited.
3) And therefore, the individual sacrifices career mobility, unless he or she chooses to stay in that particular company, and somehow negotiates a pro rata commission if moving to another position within that company.
I can see what's in it for the company. People won't want to leave "prematurely." When people do leave, the company can just about predict the month he or she will be leaving. And overall, this practice locks in solid performers for years. Great for the company, but not so great for the individual.
One of the characteristics of the high tech world is that startups are always introducing fascinating new technologies, progressive companies are improving the ones they already have, and this environment of continual and rapid change tends to benefit everyone down to the consumer level. So when you're interviewing, do a thorough job of reading your offer letter, and don't be afraid to question elements of the employment contract that may have an impact on any potential career moves you may eventually want to make.