Commission to be paid to an employee for work brought into company

[andy@advancelectric.com]

Hi all,

Is there an amount based on Net profit Margin to be paid to an employee who brings business into the company? Also, does this happen only on the first job or if you keep working for that client that the employee brought, you should keep giving him commission? Has someone dealt with this? Any ideas? Experiences I would appreciated.

Thanks,

 

[mtnelect]

In business everything should be in writing:
1) Employee contract
2) Customer contract
3) Salesman contract
4) Engineer contract
5) Estimator contract
6) etc.

 

[andy@advancelectric.com]

This is exactly what I am trying to do have it all in writing. I am not sure what the figures would be and is only 1 time is all the jobs after the first job.

 

[jaggedben]

What does 'bringing business in' mean? All these sorts of arrangements are just as negotiable as wages and salaries. I don't think many companies pay commissions for an employee who gave a referral (as opposed to the employee who closed the contract) although sometimes the marketing dept might set that up as a program.

I don't think most companies pay commissions for followup sales, (although if someone closed the contract I think every sales person would consider that their account and it would be dishonorable for some else to 'steal' it without permission or a directive from management).

 

[gadfly56]

I'm not in the loop for the service side compensation anymore, but 8 years ago they did have an incentive plan. A tech is on a sprinkler inspection and notices the fire alarm is 3 years overdue. He had to write up the proposal, get the device count and get it priced up. Then it would be double-checked by a salesman and sent to the customer. If the customer signed off, the tech would get a commission. Note that the tech HAD to do all the leg work; he couldn't simply say "Hey, these guys need a fire alarm inspection" and expect a piece of the action if the salesman did all the heavy lifting.

 

[PaulMmn]

Bringing in business-- This is a rule for Sales Bonuses-- Please remember that if someone brings in a LOT of business (ie lands a contract to sell to every StarBucks in the country or some such), and gets a bonus for each location, DO NOT 'cheat' and say it's too big of a bonus-- "we're going to have to change the rules on this one!" Pay the bonus, make the salesman rich!

 

[Eddie702]

I worked for a company where my position was a little unique. I worked in the field a little but spent most of my time estimating quoting and selling jobs. I got paid salary + 1% on the gross on anything I sold. it wasn't a lot but it added up

 

[petersonra]

Bringing in business-- This is a rule for Sales Bonuses-- Please remember that if someone brings in a LOT of business (ie lands a contract to sell to every StarBucks in the country or some such), and gets a bonus for each location, DO NOT 'cheat' and say it's too big of a bonus-- "we're going to have to change the rules on this one!" Pay the bonus, make the salesman rich!

A place I used to work for gave commissions to service engineers who sold parts to customers. Usually it did not amount to much but one guy got really lucky and a customer just happened to need several hundred thousand dollars worth of something sitting in our warehouse. He got his cut but shortly thereafter the service engineer commission was abolished.

We also had reps who worked strictly on commission. One of them managed to make more on commissions than any of the district sales engineers. Somewhere along the line they changed the commission structure so it was limited to a certain amount per sale regardless of the amount of the sale. So if the rep sold a million dollar project he would get about the same amount as if it were a $50,000 project. Not all that surprising when the best reps moved on to selling for other companies.

 

[gadfly56]

Bringing in business-- This is a rule for Sales Bonuses-- Please remember that if someone brings in a LOT of business (ie lands a contract to sell to every StarBucks in the country or some such), and gets a bonus for each location, DO NOT 'cheat' and say it's too big of a bonus-- "we're going to have to change the rules on this one!" Pay the bonus, make the salesman rich!

Simplex was infamous for this. Usually, they would terminate the salesman to avoid the commission.

 

[andy@advancelectric.com]

Thanks a lot for all the comments. I am a small company of 16 guys. Some jobs bring revenue to the company but others do not so much. The problem is if I don't figure out how to give them the right amount. They end up doing the work in the afternoon and weekends which is not really great either. Also commision would have to be based on total amount sold and net profit. The problem is they might bring a client for something little, but then that client might bring a lot of work. Meaning they will keep getting a commission? We do not have sales people in the company.

Thanks again for take time and share experiences.