Top Tips To Consider When Creating A Commission Structure

When you run a business, such as real estate or selling cars, it can be tricky to work out the needs of the company while also ensuring that your sales team gets the compensation that they deserve and are entitled to by law. 

When you run a sales team, you will need to know the types of commissions that are commonplace in your state, as well as what salary and commission rates you should offer to your team. 

Luckily, there are some straightforward tips to consider, irrespective of where you are located in the US, which will keep your business ticking over and your employees getting the hard-earned commissions that they deserve. 

Keep It Very Simple

When you are looking to take on new sales staff or you are creating a new sales-based commission structure, you will need to keep it simple. But, of course, be sure that it is in line with your state’s commission laws. Colorado commission pay laws will look different from those that exist in Texas, so always aim to keep it legal to prevent issues in the future. 

Be sure too that there are no loopholes in your commission structure. Your team should be able to know what commission they will get if they make a sale worth $20,000, for example. 

Caps Are Not Good

You want to motivate your team to make sales, but they will be less inclined to do so if they discover that their wages are capped. For instance, if one employee is an expert salesperson and earns $75,000 in commission in a single week, it is guaranteed that they will not stay as a hot shot sales rep if they are only able to earn a set $5,000 max per week. 

So, if you are looking to inspire good work from your team and to ensure that quotas are met, do not cap their earnings. If they earn it, they deserve to keep it!

Try Not To Restructure

When it comes to making a commission structure that works, it can be hard to get it right the first time. As a general rule, most companies that offer sales-based commission offer it on top of standard pay, as this reassures employees that even if they make no sales, they will still get a basic wage to live on. 

However, this may not work for your company, and you may need to do a reshuffling of how the commission system works. This is not likely to go down well, especially if your team has gotten used to working with an older system that paid more. So, when possible, try to avoid restructuring your commission system, and if you need to, ensure that it is legal. 

Seek Legal Help

This area can be complicated, and so there is no harm in seeking legal help to assist you in drawing up a commission-based plan for your team. This will ensure that your system is in line with your state’s laws and that there are no loopholes that could be problematic for you in the future.