Adverse Compensation

This week I learned that Louisiana high schools are ranked based on a numerical score, part of which is determined by the number of students enrolled in certain classes.

As I understand it, more points are awarded for honors and dual-enrollment courses, but sadly zero are given for extracurricular activities, which include music and art classes. As the owner of a creative business I find this very alarming. In terms of fostering creativity, music and the arts are some of the most important classes to our industry.

Systems of what I call adverse compensation are nothing new though.

Oftentimes, companies offer compensation plans that encourage sales people to push one particular product or service over others. The problem is that the option best suited to the sales person’s pay check is not necessarily going to be best for the client, which in the long run won’t be best for the company.

In another plan I’m familiar with, the net commission rate drops at around $X which causes the salesperson to actually lose money if he should sell $X.01. At some point his pay would catch up and be higher, but there’s an obvious window in which he’s encouraged to sell less. Again, not best for the company.

In yet another plan commission rates are fair, but the limited availability of large clients in the market make it difficult for new sales recruits to make a comfortable living. Again, well, you get the point.

There’s really no such thing as a perfect compensation plan, and it’s not always possible to think through all the potential problems and loop holes; but every effort should be made to find and address them so that everyone’s bottom lines aren’t adversely impacted.

-Sarah, Emogen marketer