anyone in sales & have an opinion on how bonuses are paid

[bubble2bubble]

We are starting a new shop ( off shoot of our existing business)and have a very good canididate in mind for manager
We ideally want to involve this guy as much as possible and make it financially viable for him as well as us so are therefore looking at giving him a percentage of sales/profit in addition to a salary
If we give a monthly percentage this has to be based on sales rather than profit... is this the usaul way things are done?
if we give a percentage of profit this will have to wait until the end of the financial year and could potentially be a massive amount
which would be more motivational/acceptable to an employee? As I have never worked to sales targets myself, I really don't know which would be best, or even which would be normal practice..

Many sales bonuses are earned quarterly and paid a month or two month's after the end of the quarter.

I personally favour doing the regular bonus and the annual bonus. Both have benefits for you.

The regular bonuses keep people interested. If they have a bad month they've still got time to improve things, but not so long that they give up on the year if they are down at the half (IYSWIM). This bonus does not have to be enormous and can be capped. You can also add other measures other than sales, such as service (very important when establishing a new business) using a mystery shop score or customer survey.

ie Sales Bonus:
No bonus if achieves less than 100% of target
£100 if achieves 100% of target
£1 paid for every additional, full 1% target is exceeded.
Maximum bonus capped at £500

The annual bonus, based on profit is the one that will keep someone in their job by incentivising them to stay and do well. This should be the significant bonus. You can base this on net or gross profit. Remember the more profit they make, the more they get... and the more you get. Consider what your expected turnover will be. If you expect to make £100,000 after all costs (including all staff salaries and other bonuses then between 1.5-8% would not be unusual.

What you absolutely must do is make the targeting very clear at the start and achieveable. You must explain how any bonuses will be calculated and paid as getting it wrong will piss people off more than never having had it in the first place.

That is very, very helpful- thank you
I am very much in favour of having things very clear & in black & white, having worked for so many employers in the past who make wooly promises - really annoying. This why I really want to get things clear in my mind and decide exactly what we can offer before we actually sit down with the new manager

You're welcome

I would heartily recommend a service element being included in any bonus structure as I've seen too many people do stupid things to manipulate sales figures which will damage your brand.

The two elements to focus on are customer complaints and customer feedback.

I would advise having a process where customers can escalate any complaints to you if they remain unsatisfied with the response from the shop manager (address to write to, email address on till receipt/website etc). However, all complaints should be referred to the shop manager in the first place to respond to. If he's never seen the complaint then he can't be responsible for resolving it.

You should never penalise someone for receiving the odd complaint (trends and excessive complaints should be investigated and evaluated separately) as a well handled and resolved complaint is the mark of good management - because things do go wrong occasionally.

People are more likely to complain than praise so mystery shopping can be useful. Just agree what will be measured and how it will be scored in advance. You can give a score to each section and weight it to show importance. Some sections you may not give a score to (eg rate your experience out of 10 and comments as they are quite subjective)

ie Mystery Shop - Presentation of Store

Windows were clean with neat display of current promotion Y/N

Shop floor was clean and tidy Y/N

Till Point was clear of clutter with mandatory notice clearly displayed Y/N

Till point was manned Y/N

All visible members of staff were wearing name badges Y/N

All staff were smartly dressed in company uniform Y/N

Mystery Shope - Customer Experience

As a customer I was acknowledged by staff when I entered the store Y/N

A member of staff approached me to offer assistance Y/N

When approached the member of staff's manner was polite and friendly Y/N

The member of staff dealt with my query quickly and professionally Y/N/NA or...
The member of staff referred me to a colleague who dealt with my query quickly and professionally Y/N/NA

I would rate the service I received out of 10 as....

I would recommend this store to a friend Y/N

Other comments....

Good luck with the new store

something makes me think you've done this before....

Um it turned into a bit of a vent. Sorry

My job used to be to earn the bonus... now it's to smooth out the problems and implement the policy. So I am familiar with the odd bonus query or two