Commission override is a sales compensation mechanism in which a manager receives a portion of the commission earned by their subordinates. This is typically done as a way to incentivize managers to help their subordinates succeed.
There are several reasons why a company might choose to use commission override. First, it can help to motivate managers to help their subordinates succeed. When managers know that they will be rewarded for their subordinates’ sales, they are more likely to provide them with the support and resources they need to succeed.
Second, commission override can help to create a sense of teamwork among the sales team. When subordinates know that their manager will share in their success, they are more likely to work together and help each other out. This can lead to increased sales and revenue for the company.
Third, commission override can help to reduce turnover among sales managers. When managers know that they can earn a significant amount of money through commission override, they are less likely to leave for a competitor. This can save the company money in the long run, as it costs time and money to recruit and train new sales managers.
There are a few things to keep in mind when using commission override:
- The amount of commission override should be carefully considered. If the amount is too high, it can be a drain on the company’s finances. If the amount is too low, it may not be enough to motivate managers.
- Commission override should be structured in a way that it is easy to understand and administer. The company should have a clear policy on how the commission override is calculated and paid out.
- It should be reviewed on a regular basis. As the company’s sales performance changes, the amount of commission override may need to be adjusted.
Overall, commission override can be a valuable tool for companies that are looking to motivate and retain their sales managers. However, it is important to carefully consider the amount of commission override, how it is structured, and how it will be reviewed on a regular basis.