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Leslie Carothers

Commission vs.non-commissioned

Dear Readers, The votes are in and this issue wins. So, without further ado…

As many of you have undoubtedly read or heard, more and more stores are going to or are considering going to a salary plus bonus program and taking their people off of straight comission.

I have clients that are on both systems so I am fortunate enough to be able to hear and see the results firsthand.

Since most retailers are still operating in a commissioned environment, I am going to ouline some of the benefits and pitfalls of a salaried environment for those of you considering the switch.

1. Easier to attract employees.
2. Easier to do long-range strategic planning since salaries are now a fixed cost.
3. Much better teamwork within the store environment-in a way that the customer can "feel."
4. Much less turnover as employees feel more secure and can focus on selling the customer the absolute best solution for their needs -irregardless of cost, etc.

However, there is a BIG issue out there in the land of salaried sales consultants and it is this: with rare exception, all of the stores that I know of that have salaried employees, have employees that don't put enough emphasis on CLOSING the sale. They are much more apt to let the customer "go home and think about it" because they are TOO relationship focused.

Now, do customers appreciate this low-key approach? Yes. However, do these stores sales reflect this appreciation? For the most part, no.

What's the solution?

Make sure you have a very strong bonus and recognition system in place if you want to go to straight salary. The stores that employ this strategy have the best of both worlds. What is a strong bonus?  Hint: it's not 10 dollars at the end of the week and it's not 50.00 at the end of the month. It's much stronger than that and is awarded in different categories so the same people don't always end up with it. And, what is recognition? It is not just saying  "good job", it is done in front of other people and it is something the employee values-a plaque, a special business card, a weekend away, etc.

With this system in place, you still reward and recognize your key players in different categories while at the same time allowing your employees to feel(fairly) secure. If you want to maximize sales you have to  have an element of competition in place and there has to be SOME accountability for individual performance. Otherwise, you end up with a lot of nice people and lackluster sales-not a formula for long-term sustainable success.

Why do you need to measure? Because, even though you may operate as a wonderful team, you still need to be able to identify, coach and give developmental feedback to those individuals who are not performing up to standard. Keeping "score" (as consultants see it) is not about punishment, it's about providing them with the opportunity to learn what techniques and strategies will lead to their personal success. And, after coaching and feedback, if an employee is still not performing well in sales, perhaps there's another place within your organization where their talents can be better utilized.

It's long been thought that the best people go where they can maximize their income-a straight commissioned environment-which is certainly still true for some people- but I have found that it is a combination of factors that attract top talent and money is not necessarily highest on the list.

What do the top consultants tell me is most important to them?

1.  Excellent(not just pretty good) back end support so they can focus almost exclusively on sales.
2. A strong sense of being made to feel "important and valued" publicly.
3. An appreciation for work place flexibility.
4. An environment that they feel proud to be associated with-they love the merchandise, the advertising, the website, etc. They are very aware how your store's image impacts their business and they want to feel passionate about it.

I have come to believe that a store with a unique culture that combines a good salary with a very strong bonus and recognition program along with flexibility in scheduling will be the store that, over the long term, attracts the top talent.

One last note, make sure and still hold them accountable for performance(which means you have to measure)  and don't be afraid to get rid of toxic top writers who are impacting the performance of the rest of your team!! A topic for another blog…

I'd love to hear your opinions and experiences. As always, please write to me at leslie@tkpartnership.com.