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05/21/2015

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Good article. In a now long (long) ago prior position with a big U.S. retailer, we had something similar - although in contrast to a ramp rate, I would have to characterize it as a "slide rate" (since it angled down, not up). On reflection, I'm not sure how intuitive or motivational it really was (I wasn't a program "designer" back then . . .) - since the commission % actually decreased at certain thresholds. Maybe this was okay, because I recollect that the salespeople seemingly always managed to reach the first, and maybe even the second threshold, without too much difficulty.

Again, back then I had plausible deniability, although maybe it was just less plausible, and more denial . . .

Isn't every commission plan an experiment? If not, they probably SHOULD be, because of the relatively short shelf life they typically have. If sales revenue generation patterns don't change regularly, there may be something wrong. Can't remember any sales commission plan that was immutably fixed and never got tweaked, altered, refined, modified, etc., but stayed infinitely unchanged.

First, the CEO should know that it is not uncommon for the top sales person, or two, to out earn the CEO in cash comp (at least for a short while).

Second, My guess is that this is a rather small company that just made some big moves. Companies don't like adjusting variable as often as it should be adjusted. They would rather spend there time and effort on other things. BUT, sales pros at small companies must often be offered some type of outsized potential to help the company clear certain hurdles to future success. As those hurdles are met and then exceeded plans must be quickly and thoughtfully adjusted. If you wait too long the higher pay will become an expectation rather than an exciting extra.

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