AP NEWS
Related topics

Sales Commission Under Review As Retailers Emphasize Service

July 17, 1992

CHICAGO (AP) _ Sears, Roebuck and Co.’s auto shop crisis has put a spotlight on sales commissions but compensation experts say no incentive plan can keep employees straight if the corporate culture is crooked.

″If you’re in an organization that lets you know what is acceptable behavior and what is unacceptable behavior, you know that if you cross the line, you’re going to get booted out of the organization - and that’s what keeps you in line,″ said Steven H. Grossman, a sales-force management consultant with Towers Perrin in Chicago.

He said a commission program is just one of many tools for fashioning an incentive program that preferably benefits a company’s employees, its customers and its bottom line.

Commissions mean the more you sell, the more you’re paid. They have come under close scrutiny since Sears abolished commissions and sales goals for its auto service advisers last month amid charges they sold unnecessary work.

Sears Compensation Director Ken Cook said the company is considering a new incentive program for auto service advisers that would link rewards to customer satisfaction, a strategy that is gaining popularity at other companies.

Sears auto mechanics participate in another incentive program that pays them a bonus to finish each job in a timely manner and get on to the next one, according to James Thornton, Sears’ national automotive business manager.

Among large auto repair chains, K mart and Firestone Tire & Rubber Co. said they have no commission program. Goodyear pays its mechanics an hourly wage plus commissions. Montgomery Ward & Co. offers ″incentive compensation for such things as productivity and quality,″ according to spokeswoman Ann Raives, who declined further comment.

Sears said June 22 that auto-repair sales commissions created an environment in which ″mistakes″ occurred. The Chicago-based company switched its 3,500 service advisers to straight salary but kept 50,000 sellers of appliances, electronics and other big-ticket items on a salary-plus- commissions schedule.

″A customer is dealing with an unknown when they bring a car in to have it serviced,″ Cook explained. ″When you go in to buy a stereo, you see the stereo right in front of you.″

Cook said commissions encourage salespeople to understand their products, match them to their customers’ needs and motivate them to work harder, which helps the company.

A commission program also puts the company’s payroll costs more in line with sales volume.

But commissions also encourage hard-ball sales tactics, according to Highland Superstores Inc., a Midwestern electronics-and-appliance chain that eliminated them in all of its 49 stores in early June.

Highland, based in Plymouth, Mich., said, ″customers are turned off by the pressured atmosphere ... created by a sales force working for commission.″

Spokesman Chuck Sinclair said Goodyear’s policy of answering customer complaints by refunding the money and redoing the work ensures satisfaction.

And he said the best mechanics prefer to work on commission because they are rewarded for doing good work quickly.

″You’ve got to keep that customer satisfied to keep them coming back,″ Sinclair said. ″If you don’t keep them coming back, you’re not going to be successful in business.″

Grossman of Towers Perrin said repeat business is the best measure of customer satisfaction and a good one on which to base an incentive program. Less reliable, he said, are attempts to measure customer satisfaction through written and telephone surveys.

He said survey questions can be slanted to produce the desired results, and the customers most likely to respond are those that have had bad experiences.

Team incentives provide less temptation for abuse than individual sales commissions, said Thomas Mott, a sales compensation consultant with Hewitt Associates in Chicago’s suburban Lincolnshire.

Mott said individual sales commissions are more open to abuse if the customers are poorly equipped to evaluate what they’re being sold; if comparison shopping is impractical or impossible; or if an urgent buying decision is required.

He said individual commissions also can invite abuse if the salesperson is unlikely to see the customer again; if the company does not track customer complaints; if the salesperson is portrayed as a service provider (e.g., a bank’s financial counselor); or if there is an unusually large reward for making a particular sale.

AP RADIO
Update hourly