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November 30, 2010 / Mervyn Dinnen

Is ‘Commission’ Becoming a Dirty Word?

‘We don’t work for commission, we work for you’

Walking through my local branch of the UKs largest electrical retailer you couldn’t escape that statement. It was printed on every price tag and every poster.

Flip this and you may think that if they worked for commission then they wouldn’t be working in your best interests.

Cross the road and enter one of the UKs largest mobile phone retailers. In their literature you’ll read…

‘This year we also made a big change to our Retail Reward Scheme; we scrapped our commission-based pay structure and introduced our new pay deal, which encourages better team-working, and more emphasis on providing great customer service’

Flip this and you may think that working on a commission-based pay structure does not encourage team working and an emphasis on greater customer service.

I’ve also noticed a growing tendency for financial services businesses to start advertising the fact that their staff do not receive commission…

…and I have sat in many client presentations where the fact that I was not remunerated by commission has been a big positive for the client.

Regular readers of this blog will know I believe that rewarding purely for sales achievements as opposed to providing a great service and experience has driven poor practices and behaviours in the recruitment industry.

Now it would appear that leading businesses in other sectors may be thinking about how commission based rewards affect behaviours…and seeing a no commission approach as giving them a competitive advantage.

So is ‘commission’ becoming a dirty word?

How can you provide an impartial, collaborative, customer centric service whilst incentivising individuals with commission?

Does a no commission policy give you a competitive advantage?

Let me know what you think…

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7 Comments

Leave a Comment
  1. janeblackmore / Nov 30 2010 6:24 PM

    As you know I am a recruiter and I am paid via commission and a basic salary and I also insist that my clients and candidates recieve a strong service.
    When I was a whippersnapper I was very driven by the high OTE’s you could earn in recruitment but as the years drag on I am much more motivated by having a strong name within my client base and being known as a reputable recruiter not someone chasing the money.
    I think that taking commission structures out of recruitment reward through progression, etc is a bold and much needed step forward.
    What we do is a skill and some do it better than others. Sales is a small part of what we do and the industry needs to be focused on the bigger picture of candidate and client satisfaction.
    i for one would be happier with a reputation than a commission structure
    i would be interested to hear what other agency recruiters think….

    • Mervyn Dinnen / Dec 5 2010 11:12 PM

      Thanks Jane, some really insightful comments. I agree that we need to find a way to measure and incentivise candidate and client satisfaction.
      Would be good to hear how other sales led businesses are tackling it.

  2. Natalie / Nov 30 2010 7:31 PM

    Very interesting blog.

    I work for a company where there is commission to be earned, but most people work for our company because we want to be part of the brand and the culture that surrounds it.

    Would our industry work with no commission? No I don’t think so. Do I think that some companies think that commission is the be all and end all and so tends to be targeted wrong? Yes. There needs to be a fine balance between incentivising employees to reach that next milestone and to better themselves and throwing money at those that are only motivated by their commission payout – at any cost.

    • Mervyn Dinnen / Dec 5 2010 11:08 PM

      Thanks Natalie. I think that the biggest problem that we face is working out how to measure and inentivise experience. The immediacy and transparency that social media brings will lead to an advocacy that will quickly lead companies to being much more sensitive to their customers/clients experience. How to encourage that through incentives will probably take some creativity!

  3. ceme123 / Dec 3 2010 11:30 AM

    Hiya. I think that it is a hot topic at the moment because of the bankers bonus’s and somehow it is getting associated with something ‘dirty’. Personally I don’t think incentivising staff with commission is the problem, if they are motivated to work harder by money then that should be their reward.

    However, the issue is with the targets that are being put into place to earn that commission. Often companies say they want to build relationships yet targets are set solely on income and relationships/customer service etc are not differentiated.

    Many employees are not thinking about the long term future, just their next payday. It doesn’t always matter to them how they meet that target, just that they meet it and they will go for the short term answer every time because that is how they will earn the most money.

    • Mervyn Dinnen / Dec 5 2010 10:55 PM

      Thanks Chelsie and some interesting thoughts. You are right in that it is probably not the payment of commission per se but the deliverable and measures that trigger the payment of commission. If they lead to short term behaviours then they are unlikely to deliver longer term business growth.

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