5 Salary Variations to Consider

Some of these options can be integrated in with the plans already discussed.

1. Draw against commission. Helps salespeople have a more predictable base income; may be especially appealing to new associates.

TIP: Be sure that you provide salespeople with monthly statements to show them where their income stands in relation to their draw. Also, be sure to adjust draws at least once a year so that salespeople who are not producing will not end up owing the company money.

2. Guaranteed income for one year. Attracts new salespeople.

3. Graduated split.Encourages higher productivity and helps you attract more experienced, productive salespeople.

4. Equity participation. May be attractive to top salespeople.

5. Profit sharing. May reduce turnover; also appealing to non-sales personnel.

TIP: Always discuss new commission programs with salespeople and get their buy-in before implementation.

5 Considerations When Calculating Commissions Splits

1. Keep compensation competitive, but don't pay so much that your company isn't profitable.

2. Offer higher splits only to those who have consistently demonstrated they can bring in enough to recover expenses.

3. Provide incentives—the possibility of higher splits, for instance—to encourage salespeople to perform.

4. Base splits on production level, not length of service.

5. Treat all salespeople fairly, and don't single out favorite people for better splits.

TIP: Consider offering higher commission splits to associates who achieve designations or complete certain training programs. —John Evans, Coldwell Banker O'Conor, Piper & Flynn

Pluses in Managing 100-percent Commission Salespeople

As employees, salaried sales associates offer a different, and sometimes easier, management experience, says Linda Carducci of Lynn Street, REALTORS®, Herndon, Va.

You can take advantage of each associates' strength. If you have a great lister or a terrific buyer's representative, he or she can focus just on that part of the transaction and produce more money. A lower-paid transaction coordinator can pick up the slack.

Your business administration will be easier because you can require associates to be in the office or at an open house at a particular time.

You will be able to do more training and supervision because you will have the right to direct their activities.

Company marketing and branding can be handled more consistently.

TIP: Create team as well as individual bonuses to motivate associates to cooperate and work together. —Ike Broaddus, Century 21 New Millennium, Alexandria, Va., in Real Estate Broker's Insider, February 2001

Salespeople's Top 7 Commission Complaints:

1. Unequal treatment among salespeople in the office. —David D'Ausilio, RE/MAX Heritage Realty, Southport, Conn.

2. Wooing a salesperson with promises of big splits and then changing the plan after he or she comes aboard. —Ken Deshaies, CRS, ABR, RE/MAX Properties of the Summit, Dillon, Colo.

3. Ever-changing rules and fees that benefit only the broker. —Jim Crawford, RE/MAX Greater Atlanta, Roswell, Ga.

4. Brokers not dealing with salespeople who "steal" clients from one another. —Ken Deshaies, CRS, ABR, RE/MAX Properties of the Summit, Dillon, Colo.

5. Having to pay a percentage of the commission on a sale—versus a flat or annual fee—to the multiple listing service. —Jim Crawford, RE/MAX Greater Atlanta, Roswell, Ga.

6. Refusing to accept alternate arrangements with clients, such as fee-for-service. —Wynne Achatz, Real Estate One, Westrick, Marine City, Mich.

7. Collecting processing fees from buyers and sellers over and above the normal commission charged. —Carlos Garcia, CRS^®, GRI, The Keyes Company/REALTORS, Miami

 Tips for Negotiating Commission Splits >