James Schramko here. Today, I’m sharing with you the dangers of a bracket creep pay plan. Plenty of business owners want to incentivize their team, especially sales-related roles and they sometimes put in place a bracket creep plan.
And by that, I mean, as the person makes more sales, they can jump from one percentage pay to the next percentage pay. The danger of this plan is that salespeople will often hold back on business if they’re not going to reach that bracket threshold. And they’ll actually defer sales and they’ll ask clients to just take their time or worse, they’ll take the deal, put it in the top drawer, and then wait until the rolling over of the next month. And then they go for broke trying to get that next pay bracket. This is terrible for your business.
It’s a worst possible experience when you have salespeople manipulating deal flow to try and stag that big commission. So remember when it comes to incentive plans, there will always be the downside. You have to consider, what does this reward people to do? And a monthly pay bracket creep plan will reward salespeople to manipulate the numbers. So if you are going to do that plan (and there are certainly other things you could do), then I would look at a three-month rolling average so that the chances of it being manipulated month to month reduce significantly. And now you can have a better experience for your customers.
I’ll probably share with you some other tips around how you can incentivize salespeople in particular, in future episodes if you’re interested. Be sure to comment near this video so that I know that’s something you want.
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