Cut Expenses, But Change Comp Plans Cautiously

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May 7, 2014

Dear Barb:

My overhead continues to increase while profits have leveled off. The only solution I see is possibly restructuring the compensation and commission plan I have in place for my sales team. This represents my highest costs and in some instances payroll is where I’m losing the most money. I do have concerns about how to present this to my sales team without having a mass exodus.

Marty G., New York, NY

Dear Marty:

There are several things you can do to resolve your current situation. Have someone who is a non-revenue generator put out bids for every expense on your P & L except payroll costs. This would include phone services, cell phones, internet access, printing, insurance, etc. Offer to compensate this person 10% of the money that is saved over the next 12 months. You will be amazed how you can lower your overhead by not being loyal to products or services you’ve used for years. Often there are better products or services available at lower costs.

If you have individuals on your team who are not making you money, put them on indefinite probation today and provide them with a plan of action to turn things around. Micromanage these individuals to ensure minimum standards are met daily. If these individuals do not hit minimum standards, they are fired. You are in business to make money, not provide jobs for the individuals who work for you.

Be very cautious if you change compensation or commissions. This is the quickest way to lose productive members of your sales team. They must see the WIIFM (What’s In It For Me) if you roll out a new comp plan.

Barbara J. Bruno, CPC, CTS

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