TreyMarkel

When I was growing up my parents always wanted me working. They were smart because it probably kept me out of trouble. As long as I can remember, I have always had a job. From mowing the lawn for Dad on the weekends to going door to door to promote a local companies pizza restaurant, to working for a bank, two wineries, scrubbing boats from head to toe, working on a farm, I had seen and done quite a few things. I had some wicked compensation plans. I remember when I was really young, my neighbor told me he would give me five cents per light bulb that I put up on his house and Christmas tree during Christmas. Oh man when I heard that I was all over it. My eyes lit up and I worked all day and put up all kinds of lights. Hahaah I was a rich little boy.

For the last 4 years I have developed a number of compensation plans for sales people in the Internet lead generation industry. A job that requires quite a bit of phone calls, different product offerings, and a short sales cycle. I wrote a lot of great plans that employees flourished on, and I wrote quite a few terrible plans that employees hated. I sat down one day and tried to find a common denominator in all my successful plans and why they were successful and on the opposite side, I tried to find a common denominator for my unsuccessful plans and why employees hated them so much. I found some interesting results.

Easy to Understand – Employees enjoy and are motivated by something they can understand. It allows the employee to track their sales and compensation each day of working business. If an employee doesn’t understand their compensation plan and it’s so difficult you need a P.H.D in physics to figure it out, what is the employee working towards? If the employee can’t clearly see the goal on paper , they are most likely not going to hit it.  Keep it simple and easy to understand.

Job Description – In many small companies most employees will wear multiple hats. This is very common in a growing company where there is so much to be done and not enough people to get it done. If in fact this is a scenario you have, make sure each employee has a main base foundation job description. You can tie their job description to their compensation plan to make sure they stay focused. There is nothing worse then an employee that has been asked to do a thousand things and is getting paid to do one thing. An employee may be able to handle it for awhile but there will be a time where the employee is going to be fed up. What is the employee going to paid to do? What is their job description? Make it clear.

Goals and Incentives - As a sales person myself, goals and incentives were always at the top of my priority list. Tiered goals I have found, work the best for sales people. However, if you make the tiers to far apart then the employee won’t be motivated to stay the extra hour or two to hit the next tier. Keep tiered goals and incentives close enough together where the employee feels like they are making some progress. If you have a business where you know for a fact without a person in a seat the position will generate $2,000 a month in revenue, start the first tier at $500 dollars in revenue or $1,000 dollars in revenue. There isn’t a lot of money to be paid at these tiers for the employee, but it gives the employee a nice sense of accomplishment right out of the gate. Once they have hit $1000, make the next tier $1,500, and the next $2,000 and tie daily compensation to these tiers if they are reached.  This keeps employees on the edge of their seat wanting to work hard each day to hit that next tier. If the next tier is too far away, the employee will just say screw it and give up.

Consistency – Most employees working for a small business understand that there is going to be change. Without change the company won’t grow. However, too much change too fast can create negative attitudes that spread through a company like a wild fire. Be up front with your employees and their compensation plans. If you respect them and make them feel like they are being taken care of, then they will understand change and be prepared for it when it comes. Create compensation plans that are scalable to the current business environment. Put tiered goals in there that are out of the companies revenue realm today but might be in 6 months from today. Employees will feel much more comfortable if their plan entertains change instead of getting a whole new plan every time the company wants to make a change. Be as consistent as possible.

Hard Copy – Make sure all employees have a hard copy of their compensation plan. Employee’s won’t be motivated to hit their goals, probably wont understand it, and most definitely wont be happy with it, unless it’s ingrained in their folders or files with a hard copy. Most people are visual people. Give employees something they can see and hold.

I hope this helps some of you entrepreneurs in hiring new employees and creating compensation plans. Leave a comment and let me know what kind of compensation plans have worked for you and your employees. I would love to hear your feedback.