E21 Creating The Right Terms for Commission Structures with Matt Smith and Jean-Luc Johnstone

Creating The Right Terms for Commission Structures

One of the most effective ways to expedite growth is having a commission structure for employees or agents. Commissions allow people to go the extra mile and get more leads or better contracts, ultimately letting the company earn higher profits. What should you consider when writing a commission structure? And when is it the right time to promote profit-sharing and equity over commissions?

In this episode, Matt Smith and Jean-Luc Johnstone share their thoughts on the pros and cons of commission-based work. They explain how owners can ensure a balanced commission structure for both agent/employee and the business. They explain how to create a tiered structure and establish attainable KPIs. They discuss the differences between commissions, profit-sharing, and equity, and explain when to use one over the others. We also discuss the importance of testing your incentive structures and the best way to go about it.

 

“Too low commission doesn’t encourage growth; too high leads to lower job security.” – Matt Smith

 

This week on the Expensive Advice Podcast:

Discussing commissions with your agents or employees

Can employees rely on discretionary bonuses?

The importance of making your KPIs clear, achievable, and measurable

Getting the right balance in commission structures

Establishing a tiered structure for commissions

When to start a profit-sharing incentive contract

The difference between commissions and profit sharing

The best way to test your incentive structures

Mechanisms you can use to transfer equity

When to use “Phantom Shares” as profit-sharing incentives

 

Connect with Matt Smith and Jean-Luc Johnstone:

Matt Smith on LinkedIn

Jean-Luc Johnstone on LinkedIn

 

Turning Boring Money into FUN Money

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