It follows that some of those attracted to a predominantly commission-based pay structure will be less risk-averse and perhaps have a greater level of self-belief than those who opt for a more stable reward framework. I’m not suggesting one approach is wrong or that another is right, I’m just pointing out they are fundamentally different and are likely to attract different characteristics in an employee. At its best, the traditional commission structure attracts high-performing sales people able to hit and exceed sales targets while creating great customer relationships.

However, at the other extreme, the traditional model can create individuals for whom the only focus is personal reward. This makes team working almost impossible, creates ‘us and them’ silos with other parts of the dealership and puts the customer far down the pecking order in terms of genuine care and consideration.

 

What’s my point?

Some businesses can combine all of the positive aspects of the traditional model with creating a great customer experience and I really admire them. However, some businesses struggle to recruit the very best sales people and for them, changing the model might be a viable alternative.

 

What could it look like?

Well, you would offer a base salary slightly greater than the shops, restaurants, banks and building societies pay locally for customer-facing staff and thereby attract the best from those sectors. Service advisers, parts advisers and salespeople would all be on a similar base salary, but there would be pay bands, discussed and agreed at an annual performance review, to reflect historical performance based on revenue creation and customer service excellence. At the end of the year, a bonus would be paid to every member of staff on the site for achieving a balanced site scorecard across sales performance, service performance, parts performance and workshop productivity. In this way sales, service, parts and technicians would be incentivised to support each other and work as a team.  

This model would, of course, place more fixed cost on a business, as it does for high street retail businesses. In a downturn it may be less attractive, but in an upturn it limits the amount of commission payable, so it could be a case of ‘swings and roundabouts’.

Whatever your view, I wish you a Happy New Year and good fortune in the months ahead.