Why lucrative incentive, bonus and commission will hinder your company growth?

Many companies will embark on this strategy in order to gain fast growth and also capturing the market share. This method can probably bring in fast sales but the question remain will it sustain?

Let me break it down to 2 parts, first is the risk to the organization and second is the danger to the employee.

Risk to the Organization

1.????? I am sure most companies now wanted to retain talent and think that rewarding the staff with monetary that will solve the problem. This is only for short term because how long can the company sustain this type of high reward? Once you stop or reduce the quantum, the employee will start demoralize.

2.????? There are sales organization which the company giving low basic but high commission. I have seen this in Pharmaceutical, Banking and SaaS companies. This will create the mindset of the employee not wanted to be promoted because they will lose out the earning opportunity. (Eg. A Sales Executive earning $3K as basic but Commission up to $10K vs as a Sales Manager only getting $6K but managing a team and no commission).

3.????? Following from point 2, this will disrupt the succession planning and the workforce planning since most seniors just wanted to stay on the commission position to get more money.

4.????? This may work for the first few years but the moment the company reduced this amount then the entire sales organization will fall apart. It will take a while to rebuild again.

5.????? This will also create the “fake” growth. Due to the high commission, someone could join in and pump up the sales for 1 – 2 years and get the $$ then resign. However will this group of customers stay on is a BIG question mark because there is no thorough thinking behind to sustain the customers.

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Danger to the Employee

1.????? It is not healthy because for the high commission, you will need to constantly battle for the sales and chase after the sales which will lead to many problems especially health.

2.????? You will be stuck in this position, company or industry. Eg. Your basic is $3K and Commission consistently $10K. The moment you wanted to move out of this company, you will only get X% increase against your basic. Commission has never been factored into the package so imagine even if a company willing to offer you $6K which is 100% vs your current $6K but you will not take it because you are getting $13K including your commission.

3.????? From point 2, you will continue to stay on in this same company or industry which make your value lower. Although company always not in favour for someone who has been changing job every 6 – 12 months but they don’t necessary like someone that have been in the same company for the last 25 years and in the same position.

4.????? I have seen in the Banking industry which offer very lucrative commission for the salesperson that successfully secure mortgage loan, personal loan and so on but revamp the plan entirely and cause the employee to have income drop significantly. There is also no promotion or career plan for that someone which cause them to explore out of the bank.

5.????? Just like all other businesses, remember those time when driving Grab or Uber can get you 5 figure income even just by cruising 10am – 5pm? Right now you need to drive from 8am – 8pm and consider lucky to even hit $5K a month. Too good to be true won’t last forever which now cause them to retrench thousand of support staff.

If you want to have a sustainable and long-lasting growth for the organization, DM me for a private consultation on how to create a winning formula in scaling up your business in a healthy way. As for the individual, it is not the end of the road so if you are stuck or currently having such job and thinking of moving out then drop me a message for a chat to see how I can help you.

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