In a BLR webinar entitled ‘Commission Pay Plans: How to Motivate Your Sales Staff in a Roller Coaster Economy’, David Wudyka discusses the best way to transition from a Commission Pay Plan (CPP) that is based solely on salaries to a CPP that is a combination of both base salaries and a commission. Can changes begin to be made immediately to change the current salaries to a different plan? He provides the following guidelines on how an organization an make this transition
- Such transitions are better done in phases
- Hence, instead of dropping down to the new base salary, the drop can be done in phases e.g. dropping down the sales representative’s salary from 100% to 90%. Then dropping the salary from 90% to 80% and doing so at conjuncture that the sales representatives are informed about so that they can also engage in financial planning regarding the new circumstance
- The sales representations may also be confident in their ability to sell in a commission-based plan. This, the drop in base salary would not be a burden in such situations
- However, nervousness does exist and it is always better to communicate and introduce training for the new plan
David Wudyka, SPHR, MBA, BSIE, is the founder and managing principal of Westminster Associates (www.westminsterassociates.com), a Massachusetts-based human resource and compensation firm that specializes in pay, performance, and productivity issues. He brings more than 30 years of professional HR and compensation experience to the table for clients around the country. He speaks and writes frequently on HR and compensation issues, and he earned his master’s degree from Syracuse University.