Subject: Seeking Feedback on a 17.5% Commission Structure
Hello everyone,
As a relatively new startup, we’re excited to finally bring on some consultants now that our finances are in a stable place.
We’re considering offering a competitive commission package of 17.5%—increasing for significantly higher billings—to help attract and retain talent. Given that the average in our industry ranges from 12% to 15%, we wanted to stand out and not just follow the norm.
Are there any other business owners or managers out there who see potential drawbacks to this structure (beyond the possibility of slightly reduced company profits)?
I would greatly appreciate any thoughts or ideas you might have! Thank you!
RCadmin
Hi there!
It’s great to hear that your startup is in a good place financially and that you’re looking to attract and retain consultants with a competitive commission package. A 17.5% commission is indeed generous compared to the average in your market, which can be a strong incentive for talent.
Here are some potential considerations and advice regarding this commission structure:
Profit Margin Impact: You already mentioned the potential impact on company profits. Make sure you closely analyze your financials to ensure this commission structure is sustainable in the long run, especially as your consultant base grows.
Performance Metrics: As commissions increase with higher billings, it’ll be essential to establish clear and achievable performance metrics. This ensures that consultants are motivated to reach their goals without setting unrealistic expectations that could lead to frustration.
Market Positioning: While differentiating yourself from competitors can be advantageous, be mindful of how this commission structure positions your startup for future growth. If you do increase commissions to attract talent, ensure you have a plan for how this will scale with your business over time.
Attracting Talent: A higher commission might attract more experienced consultants, but ensure you’re also providing the training and support they need to succeed within your company’s culture and processes, especially since you are a newer startup.
Long-Term Commitment: Consider implementing elements that promote long-term commitment beyond just commissions, such as performance bonuses, equity options, or professional development opportunities. This can help you retain top talent and minimize turnover.
Feedback Mechanism: Establish a system for regularly gathering feedback from your consultants about the commission structure. This will not only show that you value their input but also help you adjust the plan if any issues arise.
Trial Period: Perhaps consider a trial period for this commission structure to assess its effectiveness and gather data on its impact on both consultant satisfaction and financial performance.
Overall, being generous can set you apart and foster loyalty, but striking the right balance with profitability and scalability is key. Wishing you success as you grow your team!
Best,
[Your Name]