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Commission cap. Anyone ever had one? (1 Viewer)

boots11234

Footballguy
I work in professional sales and as I look at my next years numbers and will likely hit our companies commission cap. I've already told my boss straight up that my last day of actively hunting comes the first day I hit our cap. Now he agrees with me but has no control over this. He has only said we will go to upper mgmt when that happens.  So my question is;  has anyone been in this situation?  If so what happened?  What if anything should I ask for?  Frankly for me it's to keep my commission rate the same and simply remove the cap and let me earn.  I started this area 7 years ago from nothing and am finally going to get paid for developing and closing projects that take typically from 2 to 5 years to close.   Once closed I get a % of mass production sales for 6 years.  

PS. LOOK AT ME!

i don't make Otis $$ but I too have big hands. 

 
My company used to do this. When the top guy would hit the cap, he'd give all of his sales to me for the rest of the year, and I would give him 75% of my commissions. Then our owner realized that he wasn't saving any money so he lifted the cap.

 
That is so backwards.

If anything, the more you sell the MORE commission you should earn.

I have a number every year, when I go over it my commision % jumps (it can triple) and I get bonuses.  I have on a couple occasions made as much money in the last quarter of the year as the first 3 combined.  You are incentivized even more to continue over your goal.

I wouldn't get out of bed if my commission was capped. :thumbown:

 
I work in professional sales and as I look at my next years numbers and will likely hit our companies commission cap. I've already told my boss straight up that my last day of actively hunting comes the first day I hit our cap. Now he agrees with me but has no control over this. He has only said we will go to upper mgmt when that happens.  So my question is;  has anyone been in this situation?  If so what happened?  What if anything should I ask for?  Frankly for me it's to keep my commission rate the same and simply remove the cap and let me earn.  I started this area 7 years ago from nothing and am finally going to get paid for developing and closing projects that take typically from 2 to 5 years to close.   Once closed I get a % of mass production sales for 6 years.  

PS. LOOK AT ME!

i don't make Otis $$ but I too have big hands. 
I realize you will get long term commissions from these sales. But the wording about, "...my last day of actively hunting comes the first day I hit our cap" is ironic.

Without the future commissions and the sales in your pipeline, it could just as easily say, "...my first day of actively hunting for a new job comes the first day I hit our cap."

 
My company used to do this. When the top guy would hit the cap, he'd give all of his sales to me for the rest of the year, and I would give him 75% of my commissions. Then our owner realized that he wasn't saving any money so he lifted the cap.
I am the only person in my territory so they'd know if I gave them away. 

 
That is so backwards.

If anything, the more you sell the MORE commission you should earn.

I have a number every year, when I go over it my commision % jumps (it can triple) and I get bonuses.  I have on a couple occasions made as much money in the last quarter of the year as the first 3 combined.  You are incentivized even more to continue over your goal.

I wouldn't get out of bed if my commission was capped. :thumbown:
Yes that is exactly where I'm at. What's the point. 

 
Bad comp plan.  Sales people will always follow the comp plan.  It's up to the business to keep you motivated to sell through 12/31.  I hate caps.  Matter of fact, I put in a Q4 accelerators to where people get double President's Club credit for every $ sold to go to Cabo and a higher commission rate once they hit quotas.  Every $ to them is worth more to them in December than it is if it's booked in January.  That's the way I want it (we need to finish the year strong to make our #).

As one poster said, never shut it down.  That only hurts you and your pipeline.  Talk to your Sales VP and management.  They may make exceptions, or at the very least fix your comp plan for 2017.

 
I realize you will get long term commissions from these sales. But the wording about, "...my last day of actively hunting comes the first day I hit our cap" is ironic.

Without the future commissions and the sales in your pipeline, it could just as easily say, "...my first day of actively hunting for a new job comes the first day I hit our cap."
In a normal job you would be correct but not in my field. 

Its taken some time to get to this point but next year that's the spot I will be in.  

So I was hoping for a line of attack to give to my mgmt to get them to see the position I am in and basically tell them I have no reason to work now and do that without them firing me.  

Oh to make things worse I work for a foreign company who doesn't pay their sales force in their own country for crap.  

The one glimmer of hope is last year I gave them an ultimatum that they either paid me what I'm worth compared to others in my field or I would leave. They ended up giving me a 45k raise part of which was a increase in % on commission from 1.5 to 2.5% and from 4 years of mass production to 6 years of mass production.   So they did work with me on that. 

 
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Company has a 'windfall clause' but they've never enforced it to my knowledge. 
What's a windfall clause?   I just picked up a project that if it goes to market I will get 150k a year for 6 years. That's a windfall!!   But it pisses me off because I will see little to none of that the way my plan is set up now

 
Company has a 'windfall clause' but they've never enforced it to my knowledge. 
These are common.  As an example, if a single deal is worth 2-3X of variable commission target then it can be subject to management review.  So, if a guy makes a 100K base and on target makes 100K in commission, and a single deal comes in that would be over $200-$300K then some companies cap it.  The company I work at now doesn't do that, and 1 guy sold a deal to the VA a few years ago to net a commission of 1Mil.  In general though, caps are bad.  A guys sells more - pay 'em.  The company is making more.  I hate companies who take house deals or cut commission rates

 
What sucks is I love my job and my company. They gave me a shot without me having any sales experience and no medical experience so I am very loyal to them. To the point that I turned down a job that paid more than I make now but potentially not more in 1 year if I can square this cap crap. 

 
Judge Smails said:
Well then can you just play golf for 6 years or somethin'? I imagine if you quit you get nothing, but if they were to let you go they'd have to pay all outstanding commissions, correct? What state do you live in? I live in CA, so laws typically favor the employee big time in these types of cases.

Not ideal - I'm not saying do that.  It's up to the company to motivate you to sell more/work hard and not play golf or mail it in.  It's their problem.
Sending you im

 
Bad comp plan.  Sales people will always follow the comp plan.  It's up to the business to keep you motivated to sell through 12/31.  I hate caps.  Matter of fact, I put in a Q4 accelerators to where people get double President's Club credit for every $ sold to go to Cabo and a higher commission rate once they hit quotas.  Every $ to them is worth more to them in December than it is if it's booked in January.  That's the way I want it (we need to finish the year strong to make our #).

As one poster said, never shut it down.  That only hurts you and your pipeline.  Talk to your Sales VP and management.  They may make exceptions, or at the very least fix your comp plan for 2017.
I bet you have zero turnover with your top earners either.  I agree 100% with what you do too. You want your sales force to be making lots of money because of they are the company is making that 10 fold. You got any openings in the Midwest? ?

 
It's wrong. It's bad business.

But- my advice to you is not to threaten to stop working. Better to write a letter to the executives of your company, citing your accomplishments, the accomplishments of others in your office, and how much more sense and good business it would make to remove the cap. Be positive and polite in the letter. And good luck to you.

 
Judge Smails said:
Bad comp plan.  Sales people will always follow the comp plan.  It's up to the business to keep you motivated to sell through 12/31.  I hate caps.  Matter of fact, I put in a Q4 accelerators to where people get double President's Club credit for every $ sold to go to Cabo and a higher commission rate once they hit quotas.  Every $ to them is worth more to them in December than it is if it's booked in January.  That's the way I want it (we need to finish the year strong to make our #).

As one poster said, never shut it down.  That only hurts you and your pipeline.  Talk to your Sales VP and management.  They may make exceptions, or at the very least fix your comp plan for 2017.
This.  Make the dollars over your quota be the carrot.  More dollars, a trip, more dollars.  This gets me out of bed even earlier once I go over.  Tells me to forget next year and pile on now.

In his case - you don't shut it down... you play the game.  You maximize your dollars over 2 (or more) fiscal years if the comp plan tells you to.  Sandbag, because the comp plan says so.  Or leave, because the comp plan says so.

Anyone in the medical device/software business capping commissions is not holding onto even mediocre talent.  

 
This.  Make the dollars over your quota be the carrot.  More dollars, a trip, more dollars.  This gets me out of bed even earlier once I go over.  Tells me to forget next year and pile on now.

In his case - you don't shut it down... you play the game.  You maximize your dollars over 2 (or more) fiscal years if the comp plan tells you to.  Sandbag, because the comp plan says so.  Or leave, because the comp plan says so.

Anyone in the medical device/software business capping commissions is not holding onto even mediocre talent.  
Yes. I'm at the leave stage sadly as I've done the first two on your list.  Hopefully they make this right. I also recently turned down a director position after reviewing the offering companies commission plan and telling them that was the first thing I would remove. (This company had a cap too).   VP said I couldn't do that. He did however let me speak to his top sales guy. He told me their plan sucks and unknown to the VP He was actively looking for another job. Haha

 
timschochet said:
It's wrong. It's bad business.

But- my advice to you is not to threaten to stop working. Better to write a letter to the executives of your company, citing your accomplishments, the accomplishments of others in your office, and how much more sense and good business it would make to remove the cap. Be positive and polite in the letter. And good luck to you.
Thanks Tim. That is exactly what I am planning on doing. I did this last year and got a 45k raise. 

 
I had one once. It was called Tustin.   ####### Tustin.   Other guys had Newport, Costa Mesa, Santa Ana, I had ####### Tustin.

 

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