Wages Series Part 2: Commission Pros and Cons

Some positions offer commission based on what was sold. For example, if shutterstock_303934220a community manager sells a condo, they may get paid a commission for the sale. Deciding to offer employees commission is a big decision, so check out these three important facts.

100 Percent Commission Offers No Stability

Some positions only pay commission, so the employee only gets paid if they actually sell something. For the employee, this can be terrifying, and it may deter potential candidates who need stability in their pay. For the employer, commission-only pay can be great because the employee only gets paid if they actually do their job. If employees are unable to succeed at their jobs, they are likely to leave, which increases turnover. However, if the employee excels at selling, they can make a lot more money than with an hourly or salaried position.

Commission-Based Systems Offer Flexibility

On the plus side, however, employees who work on commission usually have a flexible schedule. Since no one is paying them just to be there, they may be able to set their own hours. They may even be able to work a part-time hourly job to ensure some financial stability. Employers, however, may not like not knowing exactly when their employees will be working.

Commission Pushes Employees to Work Harder

Whenever employees are offered commission, it is an immediate motivator. Everyone likes to make money, and if commission is the employee’s only income, they will be willing to work harder to get the job done. In turn, the employer gets highly motivated workers without having to pay them extra.

You Don’t Have to Choose a 100 Percent Commission-Based System

Not every job that offers commission is 100 percent commission. Employers can offer hourly wages or a salary in addition to commission bonuses. While this may cost the employer more money, it is actually a great solution. The commission bonuses motivate the employee to work hard to get that extra money, but the hourly wage/salary offers needed stability, so there is less turnover.

Commission pay may not be the right option for everyone, but there are some serious advantages. Commission-only income is the best way to encourage employees to work hard, but a system that uses both commission and salary/hourly wages will still push employees without causing them to become stressed about making a steady income.

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