Julian Stafford, former founding Director of Midshire Business Systems, is a big believer in rewarding success. He enabled his sales teams to increase their earning potential through a fair and achievable commission structure. By the time he sold Midshire to Sharp in 2017, annual turnover had grown to £35 million, thanks to a dedicated, ambitious, rewarded sales team. Julian explains a commission schemes he used to motivate his sales team.
Most commission schemes need a spreadsheet to decode. Here’s the simple, aggressive structure we ran at Midshire for over 20 years. Simplicity beats complexity every time and yet many companies get this important element wrong. Remember it’s meant to be motivational!
If your commission scheme needs a spreadsheet and a maths degree to explain, it’s already failed. I’ve seen structures with sliding scales, tiered accelerators, clawback clauses, and about six different variables. Points schemes where each product has a different points value, that just guarantees the wrong product gets sold every time!!!
If nobody in the sales office can tell you what they’re actually earning on a Tuesday afternoon, and if your salespeople can’t work out their own numbers, they can’t chase them.
Here’s what I’ve learned running teams for 40 years, watching businesses I coach get this wrong, and getting it right myself.
Flat commission from pound one.
Simple, easy to sell to candidates, easy to run. No threshold, no confusion. Works well for lower-ticket, high-volume sales where you want salespeople moving fast without doing mental arithmetic.
Basic salary plus a threshold.
Every Salesperson got a guaranteed basic, say £3,500 a month no matter what.
But they didn’t earn a penny of commission until they’d generated enough profit to cover it.
For instance, £5000 including a company car. Below that line, they took home their basic and nothing more.
Above the threshold, the real earning started:
25% of profit up to £10k, then 50% on everything over.
The threshold meant nobody was earning commission on a basic they hadn’t covered.
The accelerator meant nobody coasted once they had. They pushed for £11k, £12k, £20k, £30k because the last push was worth double the first.
It was aggressive. It wasn’t for everyone. Low performers left quickly.
But the people who thrived built businesses within the business, and some of them are still with Sharp selling to customers I sold to in 1997.
The lesson isn’t “copy my structure.”
It’s this: commission schemes should be simple enough that a 22-year-old on their first day can work out their own pay in their head. If it isn’t, you haven’t built an incentive. You’ve built a puzzle.
What’s the simplest commission structure you’ve seen actually work? I’ll be interested to hear your views. Email Julian Stafford.
Julian works with business owners on growth, exit planning, and M&A, helping owner-managed business owners unlock the real value inside their companies before they sell.
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