Does anyone have a good template for a sales compensation agreement?

Here’s a free generic sample sales commission agreement:

https://www.proformative.com/resources/sales-consulting-agreement

Enjoy!

Best... Sarah

I don't have a template for you, but I share your concern about the agreement being too long. In general I would want a sales comp plan that is competitive in your industry, understandable, and drives the behavior you want. I've seen plans that were very complicated with multiple tiers and multiple metrics measured. I hope your finished product avoids these complications so that your salesforce can focus on selling instead of trying to calculate how much their commission will be.

It is very hard to provide a template as it is not clear what you are selling, i.e. services or products. The commission structure for a mortgage which on average is changed every seven years (rule of thumb before latest debacle) or office supplies which create a monthly commission annuity, will be very different.

The average components of the plan should be a modest base with three tier levels, i.e. minimum production expectation, normal production expectation and stretch expectation. For sales you should include a quarterly bump, based on the company strategic goals and customer quality.

With respect to the length of the plan, you can make it easier by splitting the documentation into two pieces -

1) Term sheet - one page with the financial nuts and bolts;

2) Incentive Compensation Plan with your policies and all the state required legal disclosures. Just make sure the Incentive Compensation Plan references the Term Sheet.

Good luck.

I might add that State and Local Laws and Court rulings my nullify a "standard template" agreement.

If your agreement is more than just "we pay X% on net received for first $Y", spend the money and talk to your Corporate Counsel.

Have you looked into a performance based model? Our sales are converted to a unit; there fore the more units they sell in an hour the more productive they are paid; if they want to sit around and do very little they will make very little, but if they want to really own the sales process and tackle their customer base, they can make a ton! It really is a win win situation for both the associate and the employer. There is nothing worse than paying an hourly worker to sit on a sales floor and just wait for customers to walk through the door.

Send me your email address and I will forward you one.

Some language we include:

"Commissions will be awarded only on deals that have been fully executed, with signatures from both the customer (via an employee with sufficient signature authority) and the CEO of Our Company. Such deals must have no side agreements, refund clauses or other contingencies unless otherwise approved in writing by the CEO of Our Company. A deal must have been significantly positively impacted or driven to close by you to qualify for Commission. Such determination will be made by the VP of Sales and CEO of Our Company in their sole discretion and deals may be subject to partial payment or non-payment.

Commissions will be paid out in the last payroll of the month following collection from the customer. If deals are not collected by Company, commissions will not be paid on those deals. If deals have split payments (such as 50% current quarter and 50% following quarter) then commissions will be paid out in accordance with the above schedule after the customer pays the Company."

Typical caveat of "consult your own counsel", etc., etc.