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Why compensation agreements???

ritaanzritaanz 2,665 Posts
in HR & Employment Law Vote Up0Vote Down
My 3 VPs are discussing (to put it mildly) the pros and cons of having a compensation agreement with our salespersonnel. Some history...Our sales people were on straight salary. In 2002 we hired our first Sales Manager and he wanted to put the sales personnel on salary plus commission. The VPs and our Board are in agreement with this. Effective 1/1/2003 our sales people will be on a salary plus commission. Specific goals have been outlined for individual sales people as well as group goals. They have been told of this and appear to be in agreement. I have been asked by the Sales Manager to draft a compensation agreement for their signature. However, there is a difference of opinion among the VPs whether we should have such a document. Anyone out there with any thoughts? Help! (before I'm down to 2 VPs).
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  • 2 Comments sorted by Votes Date Added
  • GillianGillian 885 Posts
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    I think that compensation/commission structure agreements are the rule, rather than the exception. If you don't have a detailed description of the compensation/commission structure you will have endless arguments about how payments were calculated. Given that it needs to be very clear, it seems to me that your agreement is nothing more than a signature line added to the description that is given to them.
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  • Margaret MorfordMargaret Morford 1,143 Posts
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    Most companies wish to avoid the employment contract concern and having to get the agreements re-signed every time they change any part of the compensation, including giving someone a raise. Usually they just draft a document that explains the new sales structure and gives each sales person a copy so there's no misunderstanding about what the plan is. You may want to get the sales people to sign an acknowledgement that they received a copy of the plan. It also avoids the hassle with the person who refuses to sign their agreement. If you have not gotten a non-compete agreement from your sales people, this would be an excellent time to do so in exchange for the new base salary. You need legal help to draft the non-compete and to understand how to implement it in order to insure it's enforceable.

    Margaret Morford
    theHRedge
    615-371-8200
    [email]mmorford@mleesmith.com[/email]
    [url]http://www.thehredge.net[/url]
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