Jim Johnson (video) explores how to design or change sales commission structures. In the opening, he emphasizes that optimal commissions depend on what salespeople actually do (full lifecycle vs. limited roles), and that differing responsibilities (closing only vs. end-to-end) warrant different incentive levels and pay. The clip frames commission design as a diagnostic problem rather than one-size-fits-all advice.
How should I pay my salespeople? I'm thinking about changing my commission structure. See something like that on Facebook. And I really want to get involved and I really want to ask some questions because it usually necessitates another question back, because I'm thinking about changing the commissions on my salespeople. How would you pay commissions? And 900 people give them 900 different answers, all inside of a vacuum of their own business without having much experience outside of it. And so. But they don't ask the key question, well, what do your salespeople do? Do they do the whole thing? And when I say the whole thing, what I mean by that is, are they from lead to an approved job or are they watching jobs? Are they actually running production? Are they collecting check? Like, what are they doing? Or are they maybe just doing a small piece? Are they just closing the deal? They're just showing up to an appointment. Closing a deal because that function is less responsibility, deserves less incentive, but has higher volume, so they actually make more money.
