Commission is a form of variable pay that is based on performance. Team members can earn either a “flat” commission, which is usually a percentage of the sales they generate; or a “ramped” commission, wherein pay rises with each target that they meet.
Because it is performance-based, commission can serve as a motivating tool for salespeople. It is a transparent pay structure that can benefit both the organization and your whole team. You can use it to reward team members, control costs, and attract and retain top talent.
In fact, a good commission can be the difference between a low salary and a great one, especially if targets are fair and achievable. It can boost people’s engagement levels and improve staff retention rates.
However, sometimes the pay isn’t enough to keep people motivated. If certain members are performing significantly better than others, or if targets are unrealistic, it can even have the opposite effect on your team members.
The challenge is in handling team members who earn vastly different amounts. Here we will talk about how to keep the whole team motivated under a commission-based pay structure. There are various ways to avoid conflict, boost morale, and encourage teamwork.
A lot of companies pay a low basic salary paired with an attractive commission. With this structure, team members can cover their living expenses, but can also put in extra effort to increase their earnings. Commission schemes are therefore perfect for incentivizing team members’ performance.
For companies, it is beneficial because it helps reach—and even exceed—targets. This is why commission schemes are typically used in sales roles, which are heavily-target driven.
Star performers earn a lot more than team members who don’t perform very well and even colleagues from other departments who are on fixed incomes. But it is important to note that this may cause resentment among colleagues who are failing to meet their targets, or who don’t receive commission at all.
So aside from the increased potential pay, you need ways to motivate your people. You want to praise those who are doing well without isolating those who aren’t. Knowing when to intervene and provide further support is the key to motivating commission-only salespeople.
First, you need to take it to a personal level. Every single member of your team has different strengths, weaknesses, motivations, and goals. As the leader, you need to familiarize yourself with all of these qualities. This will allow you to understand why a certain member is underperforming.
This also applies when you’re hiring new commission-based team members. If you understand what makes a candidate tick, you can tell if they would be a good fit for your organization or not.
Some people are better suited for the commission-based pay structure than others. You want people who are self-motivated and a little competitive. When hiring new members, be clear on the skills and qualities that you are seeking.
Salespeople who treat setbacks as temporary tend to sell more than people who are more pessimistic. Try to look for potential team members who are positive, self-motivated, and can cope well under pressure.
You need to make sure that you have the right people for the job in the first place. This will go a long way in keeping your team motivated and happy in the workplace.
People aren’t just motivated by money. They want growth, stability, upward mobility, etc. Others want to spend more time with their family, or earn the respect of their peers. Show them that they can get what they want by succeeding in sales. Work with them towards their goals by providing one-on-one feedback and helpful advice.
As the team leader, you want to help your people grow, so be sure you’re there to guide them every step of the way. If they feel that they are moving towards their personal and financial goals by working hard, they will become motivated to perform better.
Provide regular feedback and encouragement. Even short, informal coaching sessions can work wonders for team members who are not performing so well. It can also help to keep team morale high by preventing small problems from spiraling out of control.
Conversely, if you have a member that performs exceptionally, don’t be afraid to tell them every now and then. Even star performers who regularly exceed their targets will appreciate praise for a job well done.
Just because someone is on commission-based pay and working towards their own targets doesn’t mean they should ignore the rest of the team. Teamwork remains essential.
Focus on building a positive team by holding regular meetings, using team-building exercises, etc. It’s easy for people to become single-minded. But you need to emphasize that you are one unit aiming for the same goal.
To foster a bit more camaraderie among team members, you can run fun competitions with prizes. You can turn something stressful into something that is enjoyable. A little friendly competition in the workplace is healthy.
Kennected, for example, runs sales competitions where we pit one team against the other. The winner of the competition gets a nice steak dinner, some cash, and bragging rights—until the next competition starts. Kennected encourages a fun and competitive workplace environment. We want people to feed off the friendly competition. In the end, we’re able to help more business owners with our solutions, and our reps earn more.
Another thing that’s worth noting is that Kennected has several ex professional ball players on the team. So far they have proven to be among our best performers, proving that the competitive spirit that athletes have can translate wonderfully in the workplace setting.
We also hire people based on their internal drive. Athletes are great examples of people who know how to compete, overcome adversity, and play in a team environment.
Your sales team does not have to consist of athletes. The point is you need to adopt that same mindset of competitiveness and determination if you want the commission-based structure to work well.
Not everyone can be Jordan Belfort, but everyone can learn to sell. One of the keys to having a happy and successful sales team is setting targets that are realistic and fair. Nothing is more demotivating than a goal that you know cannot be achieved no matter how hard you work.
You can get better results by implementing repeatable and duplicatable sales processes that are set up to help your team members succeed. Don’t set unrealistic goals. At the same time, don’t set them too low or else you will find it difficult to increase targets without damaging their morale.
If team members think that their colleagues have easier targets than them, they might become resentful.
You can schedule regular one-on-ones with team members to review each of their targets. Make sure that both their and your expectations are in sync. For example, if they keep missing their targets, try to get to the root of the problem and take appropriate action.
Sometimes a poor performance might be due to factors outside of their control, such as changes in seasonal demand or market conditions. However, if there is a problem with their sales technique or product knowledge, you will need to provide more training and coaching to bridge skill gaps.
Your sales staff should be your company’s number one supporters. They should be advocates of your brand. They can’t do this if they don’t buy into the company vision—or even understand it in the first place.
These people aren’t just your sales team: they are representatives of your brand, so make sure they know what they are representing. The image you portray publicly is the image your team should believe in.
Maintain your LinkedIn page, keep it updated, and regularly post informative content. Doing these will help ensure that you and your team are all on the same page.
At the same time, they need to buy into you as their leader. It’s hard to stay motivated if you don’t believe you are in the right hands. So if they don’t trust you as their leader, the whole team won’t perform to their full potential.
According to John C. Maxwell’s “Law of the Lid”, you can only be as effective as your ability to lead. It says that your leadership ability is the lid that determines how effective you are. It determines your maximum potential.
The Law of the Lid states that the lower an individual’s ability to lead, the lower the lid on their potential. So if for example, your leadership is only a 4, then your effectiveness will be no higher than a 3. Conversely, if your leadership skills are great, then you can also have greater potential. With greater leadership skills, you can have a bigger impact on your organization.
With this in mind, you can motivate your team by becoming a better leader yourself. Increasing your level of leadership will help you bring more to the table and bring your team together. Leadership has a multiplying effect, and it will impact your business tremendously once you’ve invested enough in yourself.
Becoming a better leader means developing skills that are essential to the whole team, not just you. Even if your role does not require you to be an expert in all aspects of your company, it pays to do so. Familiarize yourself with each department. It can help you understand your peers and their frustrations while boosting your own skill set.
This has a positive side effect in that your peers will see you elevating your skillset so you can support them. This will help boost morale and motivate them to perform better, knowing they have you to back them up.
Commission-based salary structures can be a win-win for everyone if targets are realistic, and if team members are motivated. Remember that commission alone is not enough of a motivating factor for some team members. Help them grow and you will see your company grow along with them.