In the hiring interview, it is a very good idea to go over this in considerable detail. Explain what the base pay is and what the possibilities are for increases in base pay. If there are bonuses possible, indicate how these are achieved.
When you’re hiring someone on commission, with or without some salary, go over the specifics of how each commission level is paid out.
“Mr. Jones, you’ll get 20% on everything up to $2,000 in sales and 30% on sales over $2,000.
“That means $2,000 X 20% is $400 and if you made sales of $3,200, then the 30% would be applied to the $1,200 — the difference between $2,000 and $3,200 — which is $360.
“Total commission that week would be $760.”
When you go over specifics like this, stop at each point and ask the applicant if they understand. If you detect any uncertainty, dig in and find out what they’re not clear on. Ask them to give you an example of how it would work and make sure they really do understand.
Then, last but not least, get it all in writing and have the applicant sign this document, indicating he fully understands the ins and outs of your pay system.
This last step is sometimes omitted and doing so can generate upsets down the road. Mr. Jones comes into your office 6 months later and demands to know why his commission check was shorted. If you have the signed document, you can simply pull it out and the situation resolves fairly quickly. If you don’t have it in writing, then each person has a different recall of what was promised.
As we all know, money can be a highly-charged subject. Take a ton of that potential charge out of the equation by:
1) Being very specific.
2) Making sure the applicant fully understands the specifics.
3) Getting it all in writing and signed.
Accomplishing all three of the above is recommended.
As the law varies in each area, please check with an attorney to ensure you are applying these tips within the law.
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