In order to retain good staff, business owners need to accept the fact that commission splits for salespeople have risen in recent years, according to one CEO.
Managing director of RE/MAX WA Geoff Baldwin said businesses needed to adopt sustainable business models to ensure win-win outcomes for all players, especially the company's best staff.
“Salespeople who start at an office understanding that they will be financially recognised for their success through consistent, easy-to-understand and achievable commission models are much less likely to move, and this also negates the probability of having to negotiate one-off deals that can often backfire,” Mr Baldwin said.
"In 1987, when I kicked off my career in real estate, 40 per cent of the gross commission - with exceptional results recognised with bonuses at 50 per cent - was the accepted norm throughout the industry. However, today we work in a completely different environment," he said.
“Although new salespeople willingly accept a lower commission scale once they hit their straps and are enjoying consistent settlements, they are inevitably tempted by the availability of higher commission splits from within their current office, or from other agencies."
According to Mr Baldwin, rather than swimming against the tide, business owners need to recognise that their salespeople want recognition for their increasing success, while establishing commission structures to enable and maintain profitability.
"It is very hard to argue when salespeople say their results come, in the main, from their own hard work, community profile, marketing, proactivity and skills, more so than any brand or from the efforts of their office. Hence, they have a right to expect a percentage of the commission on each deal they settle, to recognise their input," Mr Baldwin explained.
"Obviously, commission structures should take into account different levels of performance, must be sustainable for all concerned and must take into account fixed and variable costs, but fair, generous, pre-set pay structures are a critical component of staff retention in our industry today.”