Pay cuts

bforce · December 2002

Hi all - I need your help.

Our Japanese President wants to cut base pay for our sales staff (as high as 10%) and change the commission structure. "This to give them incentive to sell more". Our company manufactures Silicon Carbide Ceramics, for the Integrated Circuit industry. The market has been bad for nearly 2 years, but our sales force plugs along and does the best they can. They are all degreed, a few engineers, most with 10 years or more experience. (Accross the street is an Intel campus, the largest private Employer in Oregon.....of course, since they are are biggest customer and always seeking talented employees.)

I have presented the turnover formula and the motivation speech, but I don't think I am getting thru to him. Does anyone out there have any experience with this issue? Or ideas on where I can get statistics, etc.?

Thank you so much! Please email me directly at [email]barbara@agpr-usa.com[/email]. I look forward to your advice! Barb

Don D · December 2002

>
>Our Japanese President wants to cut base pay for our sales staff (as
>high as 10%) and change the commission structure. "This to give them
>incentive to sell more".

I'm glad you put that last part in quotes. It keeps me from laughing out loud. Do you think he really believes his own theory? I have no statistics or studies to share but can tell you from experience that manipulating bonuses and commissions and percentages does absolutely nothing but 'disincent', fosters bad morale and increases resume preparation activity. When a company dangles these things just out of reach and jerks them further into the pond like a popping bug on a fly line, sales employees know what's up and it doesn't take them long to realize, "Hell, these guys never intended for me to make a bonus to begin with. And the commission smoke and mirrors was only real during the interview." Cutting pay to give people an incentive to work harder? Must be a Japanese concept. It's Greek to the American workforce.

bforce · December 2002

Thanks Don. I agree and yes, it was a quote he actually said out loud to me and to the General Manager. We have American management here, and this fellow has been here for over a year, but not willing to let us American manage. It has been an extreme culture shock for this little start-up company, when our last President wanted us to manage and he wanted to do his President stuff. So, we've had some real challenges. This one, however, is the one with the most impact directly on employees. Stay tuned!

Balloonman · December 2002

Seems to me, that you should cut the sales force by 10-15% and either change the commission/bonus structure higher so those remaining see the chance to make more money. This might actually be an incentive to sell more.

I mean if we are honest we know that cutting pay and incentives for sales people will lead to turnover. Don't play games and piss everyone off, fire your 2-3 lowest performers, give the other real incentive.

But hey what do I know.

That is my $0.02 worth.
DJ The Balloonman

Pay cuts

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