Telling the boss his decision is bad for business â€” Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
Question: “Salespeople in our company receive no salary and are paid totally on commission. The owner has just announced that he is slashing our commission rate. Because he wants to focus on getting new business, he also will be paying us almost nothing for serving established customers. This gives us no incentive to service our existing accounts. The owner says this is necessary because the company is losing money. However, he hasn’t reduced expenses or cut the pay of any other employees, including himself. We have lost all respect for this man, and our morale is in the gutter. He can obviously do whatever he wants, but why would he do this?” — Discouraged Salesman
Marie’s Answer: Your shortsighted owner has crafted a plan that will simultaneously alienate the sales force and reduce service to loyal customers. Not exactly a recipe for success. Here are some things to consider:
• Managers frequently fail to anticipate the unintended consequences of compensation decisions. Although it seems obvious, your owner may not realize that he is actually encouraging his top salespeople to leave. He also has succumbed to the common emotional pitfall of valuing new customers more highly than existing ones.
• Your best hope for changing his mind is to prepare a factual business case clearly illustrating the damage this plan might do to the company. Draft an alternative proposal for reducing costs, then select someone whom he trusts to present it.
• In your proposal, suggest that he talk with a professional compensation consultant before making any final decisions. An outside expert might help him see that the real beneficiaries of this plan will probably be his competitors.