G.M. Filisko is a Chicago area freelance and former editor for REALTOR® Magazine.
6 Commission Questions
When a sales associate or recruit wants more money, you need to know how to size up the situation and respond smartly.
October 1, 2010
Whatever you’re currently paying your sales associates, you’re sometimes going to get push back from people who want higher splits.
Ask yourself these questions to determine whether it’s worth it to fork over more of your company dollar.
1. Is there a plan to justify the increase?
"If someone just says, ‘I want a 5 percent increase,’ I say, 'Why?'" says Sterling Royal, manager at Lyon Real Estate in Roseville, Calif. "It’s the same as asking for a salary increase at a corporate job. There must be a reason for the increase. I’d ask if the associate understood our initial agreement and find out what’s changed since then." Royal says he’s more receptive when sales associates present a plan to boost business. For example, if an associate tells Royal she can increase her business by 30 percent with a 5 percent increase earmarked for marketing, Royal evaluates those goals and assesses the likelihood of success.
2. Am I meeting my value proposition?
Asking yourself whether sales associates will leave if you don’t cave to their request is operating out of fear, contends Kelly Sweeney, CEO of Coldwell Banker Weir Manuel in Birmingham, Mich. Instead, ask whether you’re meeting your own value proposition. "If I start getting a lot of these requests, I have to ask whether I’m really doing what I say I’m doing, providing all the tools I say I provide," says Sweeney. "If I’m not doing that properly, I’ve got a problem to fix."
3. How important is this associate to my team?
"If the associate is adamant about an increase, I’m going to weigh his current contribution to my office," says Royal. "Is he a team player who contributes to the company culture, attends office meetings, and helps out by teaching classes and supporting new sales associates? I’m still unlikely to increase his split, but I might if he’s an integral part of the office."
4. How will other associates react?
"Are you going to be comfortable when other people become aware you’ve done this?" Howell asks. "Sooner or later, everyone becomes aware of what everyone else’s commission split is."
5. What’s the underlying reason for the request?
"Sometimes it’s about money, but frequently it’s not," says David Howell, GRI, broker at McEnearney Associates in McLean, Va. "Things continue to be challenging in the marketplace, and it may be that six months of marketing support will help an associate get over the hump." How can you root out the real problem? Know your associates. Last year, Howell had two associates whose production was down because their spouses were terminally ill. Technically, their splits should have been adjusted downward. But that’s not what happened. "It would have been an insult in the extreme," Howell says. If there’s no obvious personal issue, ask: "Is there something going on in your life that would affect my decision?"
6. What will this do to my company policies and culture?
If you change the rules for one associate here and another there, you chip away at your company’s foundation. The decision for Scott Senter, ABR, GRI, president of Senter, REALTORS®, in Abilene, Texas, is often an easy one. "Do I really want to mess up my entire system and culture for one person?" he asks. "The answer is usually no. I can’t make a change that would affect the setup of the whole company."