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Commission Plans

I lead the Finance department here and am having trouble getting a comp plan for our client-facing Account Manager rolled out. Since the last 3 years, commission has been paid on a quarterly basis given we are a small company and I am the only one who can perform the calculation. We recently changed the drivers but kept the payout to quarterly. The department lead communicated the plan to his team, but did not get the plans signed by each individual. Upon asking for the signed comp plan copies, he responded to me saying he didn't get it signed because his team wants to be paid monthly. Who is the final decision maker here - the individuals commissioned or the Department lead or the Finance lead? The dept lead agreed to the plan but apparently got influenced by his team when communicating to them. They are supposed to be paid next week (7/31 payroll for Q2) but I don't see why legally I should pay them commissions if the plan isn't even signed. I don't see why the company should pay monthly for two reasons: a) Why pay for new business when the company hasn't gotten paid on the first invoice yet (usually Net 30-45 terms). b) The above leads to more admin work on my end. c) Overall, more admin for me who's calculating bonuses - we use QB and business analytics is not very automated when using the system. d) I get the impression that the Account Managers are forcing on their Team Lead how their plan should be managed. That is wrong at so many levels, IMO. Or is this the new normal? Any suggestions on how to tackle this?

Answers

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Anon
Some thoughts:
1. Where is your CEO on this? Unless you have sole authority to determine the plan, don't set yourself up for a battle.
2. What are the drivers/what behavior is the comp plan supposed to encourage?
3. Re your 4 points above:
a-your CEO should realize that cash flow common sense here is important; what if the sales goes bad? do you claw back?
b-agreed-and it support a-get paid first
c-this seems to be the same as your b
d-what happens in your industry? I refer to my #1 &2 above...

So, put forward a proposal to the CEO that he signs off and you and the Dept head implement. If you can't do this by 7/31 then propose making a "payment on account" amount to staff and then true it up urgently in August. Staff should expect management to do this right. But staff don't decide what the terms of the plan are.

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