Do I have to accept new sales commission plan at work?

Question

Hi, I don't expect to get a huge amount of sympathy on this but here goes...

I am a salesman. I used to have a commission structure of 10% on the Year 1 revenue of a deal. They now want to reduce this to 5% and then have team targets.

Can they do this? They say it is non-negotiable but is this true? Do I have to accept these new terms? I have been working on one deal for the last 9 months and now I'll only get half the commission that I would have got?

Thanks in advance for any help.

Answer 1

I had a similar experience. The commission drop was from 10% to 7%, but the merchadise was the sort of big ticket item that consumers only bought roughly every 10 years, so there was a constant scramble for new clients.
After the entire sales force threatened to quit, the owner compromised and kept the top 70% of producers at 10%, fired the bottom 30% of sales people. He replaced them with new people at the lower commission.
While everyone was told not to discuss pay, new hires figured out pretty quickly what was going on and consequently were resentful and not motiviated to work as hard. As a result, none of them stayed long. The people who were still getting 10% figured the writing was on the wall and started job hunting anyway. Within 6 months, half the top producers left. The ones who stayed did pretty well, picking up everyone's leads, right up until the point the business closed about a year after the commission cut first came up.
While this may not help your current situation, you have to look at the dollars and cents of the short term situation. It sounds like what ever you are selling keeps producing income after the initial closing you have made.
Does your commission go up for second year revenues and beyond? Is this the company's way of getting you to nurture long term relationships with clients instead of closing one sale and moving on to the next?
Do you get money for team targets? (And do you have any control over who is on your team and how they operate?)
Will they put more money into support and marketing so that your sales cycle is faster and cheaper for you? If you can close twice as many sales without working any additional time plus you get more on the back end, this could work out in your favor.
How do your competitors pay? Is this new plan an industry standard?
How close a relationship do you have with your clients and would they move with you if you changed companies?
If you moved, how long would it likely take to get up to your current income level? And would it mean re-locating (plus re-locating costs?)
You should have a lot more questions about the rest of your compensation package. Surely the company can't expect to cut the salary of the income producers in half and expect them to stay and be happy about it.
If that IS the case, and there is no other compensating salary/bonus/something, either the company is in really deep financial problems or is looking for a way to move you out the door without having to pay severence.
If commission negociations are completely off the table, close that big sale as quickly as you can. Ask your employer about training opportunities for advancement within the company. They may be willing to pay for additional training or certification for your industry.
In the mean time it wouldn't hurt to dust off the resume and do a little networking to see what else may be available.

Answer 2

A lot depends on what is in your written contract of employment , If the current deal is there then the company need to implement a consultation process.
I suspect the commission part of the contract would be rather vague though and subject to change at management discretion ?? which probably means that they are within legal rights .
However I do have some sympathy because good management process would meant discussing why this new plan was being implemented and pointing out where you could still make the same or even higher commission.
It sounds to me that one or more of your team has not been pulling their weight , and this is a way of trying to put the onus on other team members to fill the void or push the failing sales people harder. This seems unfair to me as it should be up to management through regular appraisals and reviews to sort out those not achieving desired results.
Hope it works out ok for you.

Answer 3

Wow! That stinks! I have been in commission based sales for years, and have never had anything like this happen, but if you have a legal contract stating your 10% commission structure, you may have grounds to sue the company.

Its an awful move for the company, in my idea. Taking productive salespeople and cutting commissions in half is definitely not a smart move. If there is no contract or legal basis, you should start job searching, and find someone who rewards your personal achievement and doesn't "socialize" it. Try going to your direct competitor to the company you work for now. You already have experience and know the territory, so you are a real steal for them. Next time, make sure to get your commission agreement in writing.

If you like the company you are working for, and do a good job, tell them you will CONSIDER staying if you get the full 10% on that sale.

Answer 4

Most uk salespeoples emplyment contract's allow for the introduction of a new commision strusture with 3 month's notice. Normal practice is to continue to pay you on the old scheme but also advise you of what your earnings would be under the new structutre. At the end of the three month trial you may have the option to discuss the scheme with your manager or I suppose there may be some kind of appeal proccess but I sincerely doubt it.
I changed from a flat rate of commission to a target based scheme earlier this year. I felt that my new structure would be good for me as I usualy sell close to or over target but I have found that it leaves me very open to fluctuatuions in market conditions, ie if I have a poor month for any reason the penalty is massive but I need to have a exeptional month to earn more than I would have done last year. This year I am currently 30% down from last year and I greatly regret not opposing this scheme.
I work in the Motor industry.
good luck. sell sell sell

Answer 5

depends on the contract you may have signed on the old deal. If you have an attorney that you have dealt with in the past this might a quick review that they can review for you. If you are an at will employee then an at will relationship exists that is subject to change. Any money due under the old plan should be paid out in accordance with that understanding.

Answer 6

Your only option is to quit and find another job. Cutting commissions in half would be too much for me to accept.

Answer 7

Actually i do sympathise... Assuming your current employer has competitors, your option is to get another job and tell your boss where to stick his pay cut... It worked for me in the past, and it was the best thing I did.
Good luck.

Answer 8

well, the company is trying to cut cost and that is one way to do it... if you don't think you can survive on that cut without attracting more customers then I would suggest finding another job...

Answer 9

You can quit. Or keep your job.

Those are your options.

Times are getting tough for businesses all over the US. Get prepared, it will only get worse.

Answer 10

you can quit if u want...vote with your feet.