The problem with commission based remuneration: are companies limiting the growth of their brand?

Commission based remuneration is popular in many sales-based professional services firms; from recruiting to accounting to advertising.  Consultants (or fee-earning staff) are paid a low base salary and are rewarded in accordance with how much revenue they are personally responsible for bringing into the firm.   Essentially, companies can keep costs down and employees are encouraged to sell as much ‘stuff’ as possible.

This set up explicitly encourages individual consultants to grow their personal brand within in the market, through 1 on 1 transaction-based relationships with their clients to increase current revenue and repeat business.

Consultant For Sale

However, although commission based remuneration is popular and financially effective for many companies, encouraging employees to grow their individual brand is often at the expense of the company brand.  And although firms may reap the financial benefits of a commission based remuneration structure, they are often unintentionally discouraging employees from engaging in more altruistic behaviours which could help support and grow the company brand which in theory should be larger than any one employee.

Consider the following disadvantages of commission based remuneration:

  • The company brand is often less visible in comparison to the ‘brand’ of the client-facing consultant, as the consultant is seen to be delivering the product/service, not the company as a whole;
  • It fosters counterproductive competition among staff.  If consultants are individually responsible and rewarded for accounts, they may be less likely to share work and help one another for altruistic reasons – thus reducing the quality of the service the company provides;
  • Individuals often take accounts with them if they change employers;
  • Non fee earning staff are relegated to roles which are not as highly valued in the company, which discourages them from working on non-essential tasks which support fee earners
  • After-market support is often neglected if it is not financially attractive in the short term in comparison to new accounts and sales;
  • Consulting staff are less likely to work pro bono or for charitable clients.

Therefore, companies may wish to consider other remuneration structures that foster  more altruistic working environment, greater quality of work (as opposed to quantity) and a more loyal and staff.  This may improve the prominence and image of their brand.

Yes?  No?

//Alec Schumann

About AnthonySchumann
Subtle Bravado // Creative Boutique. Ted Anthony - Vision Alec Schumann - Creative Follow @AnthonySchumann

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