Commission disputes are a costly occurrence on any sales team. Not only do they corrupt trust and morale, but they are quite literally expensive.

One Glassdoor study found that the average U.S. employer spends $4,000 and 42 days to hire a new employee. In my experience, that’s a very low estimate! On top of that, the average length of tenure for sales reps is 18 months. And it takes an average of 3.2 months to ramp up a salesperson to full productivity. 

The point of all of this is that investing the time and money into keeping your salespeople content is well worth the effort. One way to maintain satisfaction is accuracy and trust in pay through the prevention and resolution of commission disputes.

Preventing Commission Disputes

Most commission disputes are preventable and occur as a result of poor communication, processes, and plan design. Unfortunately, by the time sales leaders find themselves in the midst of a dispute, it’s well after they’ve made some initial plan mistakes.

The good news is sales compensation design should be regularly reviewed and updated to keep up with changes in the organization, so if you’ve experienced commission disputes, simply learn from them and apply those learnings along with these tips to the next update to your comp plan. 

1. Make sure your compensation plan is documented and accessible to everyone on your team. Creating a central, digital location where everyone can refer to the plan will help your team stay informed and will help you in the event of a dispute.
2. Assess all your compensation design components for fairness and biases.
3. Understand that there will always be some level of misunderstanding, hurt feelings, and personal issues beyond your control, and prepare yourself for managing those unforeseen circumstances. Mistakes will happen. Plan accordingly.
4. Convey clear expectations to your team about professional communication and how to address disputes and discrepancies. It is important to practice conversations about compensation. (Crucial Conversations is excellent on this subject)

Resolving Commission Disputes

If you’ve reached the unfortunate position of dealing with a commission dispute, here are some tips on resolving the dispute. These are early intervention tips. It’s important to note that I am not a lawyer or a legal expert, so if the dispute moves beyond your organization’s jurisdiction, you’ll need to consult your organization’s leaders and/or legal team.

The best practice is to establish a process to address disputes to ease the tension and emotion associated with the event. If you don’t have a process, these steps will assist within those potentially heated moments of claims and accusations.

1. Don’t take it personally. Ensure to maintain a level head and calm voice, using professional language and not adding any further fuel to the fire.
2. Listen. Genuinely seek to understand rather than looking for ways to defend.
3. Don’t seek immediate resolution. Seek understanding. A good rule of thumb is to not make decisions when you’re in a high emotional state.
4. Refer to the facts of the situation. Utilize the processes and documentation that exist. That may include policies, contracts, and the sales compensation plan.
5. Acknowledge the dispute (or request) and the emotions behind it. Many times, what is fair is in conflict with current business practices. Those are the roots of change and should not be ignored.
6. Respond and own the resolution.

Sometimes commission disputes can show flaws in your incentive plan, documentation, or processes. If this occurs, remember that it’s never too late to improve how you do things. Take responsibility for the discrepancy and make meaningful changes.

Remember, employees don’t expect perfection, but they do expect honesty, integrity, and respect. Rise to that occasion!