How Commission Based Sales Hurt a Business

After a week’s vacation, Sunday night left me with the feeling that I actually looked forward to work the next day. Every so often I take inventory of my happiness and found this strange. In past jobs I have had the winter blues and in general dreaded the return to work after vacation.

What does this have to do with commissions? Everything.

Around three years ago I worked as a Customer Service Rep for a company where commission bonuses were handed out based on accounts and performance. The ‘performance pot’ was shared with the leads who wrote evaluations and daily life consisted of backstabbing, front-stabbing, side-stabbing and bottom-stabbing.

On any given evaluation at least one person did NOT get anything from the commission pot, even though we all worked hard and deserved it.I loved my customers. I loved the work. And I DREADED facing the day and the one or two employees that made life hell.

My theory is that the job would have been perfect were it not for the commission structure. It led to unfair practices within the ranks and ultimately a handful of people quit within a single year because of changes within the department that led to a greedy internal struggle.

What commission based-sales lead to:

1) Competition within your company. This is NOT good, despite what the old sales model says. Leave competition to the companies putting out similar products.

a) Internal problems when employees carry their greed too far.
b) Turfing ‘less important’ customers. (For example, in my first sales job(not the  stabbing one) the guys would disconnect if they got a ‘part’ sales. Those of us who cared more for the customer than the commission stayed on the line and sold the $50 part. How were we rewarded?  With lower commissions.
c) Territorialism – The unwillingness to help customers that “don’t belong” to the rep.
d) A lack of team work. Even if you try to build a team based on commission, you will still end up with competition between your employees. You can’t have a team with competition…that’s not what teamwork IS. Instead of looking out for each other, employees on commission tend to look out only for themselves.
e) A tendency for managers to lose sight of long-term effects of departmental unhappiness. f) Customers sometimes experience a ‘high pressure’ sales environment and rebel.

2) What are possible gains with commission-based sales.
a) When money is tied directly to performance, salesmen will work harder to upgrade or sell the higher model of whatever it is you’re selling. They will also sometimes work harder to make the sale.

In comparing the two, commission sales hardly seem worth it. The bottom line is that people WANT to do a good job. If you’re going to reward employees monetarily, the reward should come from a ‘dis-interested’ party, i.e. someone whose bonus is not tied up in the funds and it should be related to performance as a confidential and private matter.

The only time a commission-based model makes sense is when you have a group of traveling salesmen with their own territory whose responsibilities do not cross other members of the company. For the rest, commission should be tossed.

Maybe then more people could wake up Monday and look forward to the new day!

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About jeanetteraleigh

Jeanette Raleigh is an artist and author who has spent most of her life at some creative pursuit. Whether painting a castle or writing a novel, Jeanette enjoys the playful aspects of creation and strives to make worlds where others feel at home. You can find her works of art and information about her fiction at www.jeanetteraleigh.com.
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