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How to eliminate sales commissions

There are serious problems with the sales commission model. So why doesn’t anyone get rid of it? Here’s the story–with some fiscal results–of a software company that did just that.

Three months ago, when the few paper calendars that remain on earth flipped over to 2013, ThoughtWorks, a 2,000-employee software company, reached a milestone. Sales commissions, long a staple of the organization, were no more: All salespeople were now officially on salary. This concluded a phaseout that began in early 2012.

If you’re curious about why and how this happened, you’re in luck. Martin Fowler, chief scientist at ThoughtWorks, has created a visual “deck”–or a series of seven virtual note cards–filled with fantastic details. The set reads something like a case study in answering a question many organizations confront: If we eliminate commissions for the sake of fostering a team culture, what will the consequences be? Fowler’s deck lays out the problem marvelously, including gems like this:

“Usually salespeople get commissions based on closing the sale, but there is a risk they will sell services that are difficult to fulfill, leaving the delivery team to pick up a mess. This tension is made worse because delivery teams are a big factor in selling follow-on work, yet aren’t included in the commission.”

…to read this article in full, visit leading US small business resource, Inc.

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