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I'm asking in the context of a small female clothing and shoe store of 2 owners + 3 employees. Define staff as either an owner or employee.

Situation: More than one employee may be needed to "master" a transaction. This and this don't help. What do I mean? For any particular customer, staff A might generate revenue of $100 on her own. However, if staff B enters the exchange between staff A and customer, then staff B may generate another $150 for the same customer. So total revenue = $250.

Question: How should the owners share/formulate commission for a sale needing multiple staff? The sample numbers above show that it's unfair and naive to divide total commission by the total number of employees. I fear problems like:

  1. A may respond indignantly to B's interference, if B didn't increase revenue in the end. Then A might interpret B's interposition as greed to split commission (depravedly).

  2. Per contra, A may actually need B's intervention, if the customer likes B more.

  3. Moreover, what if these two intercessions are separate? It has transpired that after A had finished, a few remarks by B, at the till, resulted in further purchases by the customer.

  4. Commission might instigate a fight for the customer, but how can fray be reduced?

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    What about C ? What if a customer came in spoke to A for product 1, got impressed by B for product 2 - got in another day and purchased product 1 and product 2 from C ? Who gets a greater share in commission then ?
    – happybuddha
    Commented Jun 29, 2014 at 22:20
  • What's more important than WHAT method you choose is establishing a policy that is written rule. Salesman will fight to maximize their commissions, and sometimes in underhanded ways, but having written policy prevents squabbles over what is your practice. In the past the two systems I've seen is each person receives commission based on who sold what. The salesman are expected to be fair. (which is honestly 50/50) The other is raw split. If two salesman were involved in the sale it's a 50/50 split regardless of if 95% was from one salesman. (Both have their flaws)
    – Eric J Fisher
    Commented Jun 30, 2014 at 20:43
  • @happybuddha That's a legitimate problem that has been encountered.
    – user22656
    Commented Jul 1, 2014 at 4:04
  • @LePressentiment Therefore, the answer I gave, will take care of this problem as well.
    – happybuddha
    Commented Jul 1, 2014 at 4:12

3 Answers 3

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Looking at your profile, mathematics doesn't seem to be your weak area. If this is a real question at all, then what you are trying to find is a way for your employees to be most productive and be compensated for it. Splitting commissions is almost always a nasty business. One of the ways I can see fit is to set up store/department targets instead of individual targets. For commission, after setting the store targets, set a bounty in place. Track the numbers on a board. A row on the board can, for example, look like :
A' contribution | B's contribution | C's contribution | Store target | Winner
The winner gets 50% of the bounty and the rest is divided between the other two employees and owners. If the other employee's contribution is 0 then its a simple 50/50 split between the other two employees.

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    Second the experience that splitting commissions is a nasty business. I've never seen it work well except where there's one person who cares about it and the rest just turn up and do their time. Then the one keen person is happy and the rest don't care. Better, IME, to use an explicit share/split model like this one.
    – Móż
    Commented Jun 29, 2014 at 23:45
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I tend to think that shared commissions will lead to friction no matter how you slice them, so your best option may be to divide the shop based on your product line.

Basically split the responsibilities and commissions into departments. Given that your shop sells clothing and shoes it may be best to make "employee A" responsible for selling clothing and "employee B" responsible for selling shoes and rotate them as needed.

This will hopefully reduce the direct competition between the two employees in any given day and offer clear lines on who gets what commission.

So, "employee A" may sell the customer a dress and get the commission on the dress alone and then send the customer to "employee B" to get the matching shoes and "employee B" will get the commission on the shoes alone.

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  • Thank you. Nonetheless, how would your answer resolve the issue that 'More than one employee may be needed to "master" a transaction' ? I worry that the restriction of one employee to a sale might be inferior, because in the past, two employees on a sale have boosted revenue. Your rotation helps with possible friction though.
    – user22656
    Commented Jul 1, 2014 at 4:06
  • @LePressentiment Commissions may not be the best idea if you're looking to foster a cooperative work environment. Consider bonuses for hitting overall sales goals, rather than a commission system.
    – apaul
    Commented Jul 1, 2014 at 4:21
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As mentioned by another answer, splitting commissions is a nasty business. By avoiding it altogether, you'll save yourself and your employees from complication.

Here's my suggestion:

You've got 3 employees working in the shop.

If you were to divide the employees responsibility to three different sale types, you're heading into more complication:

  • What if you don't have three separate categories of items to assign the 3 employees to?

  • What happens when 2 different customers come in requiring assistance in the same area?

There are ways to deal with both issues, but with only three employees, I suggest a simpler solution.

Use a queue system. Employees take turns assisting customers, and only one employee per customer is allowed to assist.

When an employee finishes assisting a customer with a sale, he/she is at the back of the queue.

Skipping is not an issue. If employee A finishes assisting 2 customers before employee B finishes assisting 1, employee A takes the next spot in the queue, behind employee C.

With three employees, you may not need to keep track of the queue on paper, but if you wish to do so, it shouldn't be difficult.

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  • You could just do it by sales. If there are 30 sales in a day, each person gets 10 comissions. If there are 45 sales, do the queue system, if somebody doesn't work a day they are not placed in the rotation. This way its not a matter of who helps get the sale but the sale happens. You should still keep track of who makes the sale in order to indicate stronger/weaker sales people but only in the context of perhaps yearly/monthly awards and for manager duties.
    – Donald
    Commented Jun 30, 2014 at 12:20
  • @Ramhound I'm sort of seeing "divide the commissions up equally, and include attendance in the factoring" in that suggestion.. hat about promoting competitive performance? If I know that I and Sally Sue both get the same cut, regardless of whether she helps 30 customers in a week and I help 15, why not slack off? It's not like she won't pick up the slack to ensure her commission.
    – user20914
    Commented Jun 30, 2014 at 17:50
  • @jtodd - You don't slack off because you will still be reviewed based on your numbers. I was just adding another alternative to trying to literally keep track which person's turn it was.
    – Donald
    Commented Jun 30, 2014 at 18:33
  • Thank you. Nonetheless, how would your answer resolve the issue that 'More than one employee may be needed to "master" a transaction' ? I worry that the restriction of one employee to a sale might be inferior, because in the past, two employees on a sale have boosted revenue. Your rotation helps with possible friction though.
    – user22656
    Commented Jul 1, 2014 at 4:08