Here’s how you track sales commission effectively.

Here's how you track sales commission effectively.

How to calculate sales incentives

How To Create a Company Culture That Illustrates Your Core Values

Sales commissions are incentives paid to sales reps in relation to the sales made by each of them. This payment is in addition to the regular salary component paid to the sales team. Commissions boost the morale of sales reps and motivate them to work better.

However, not all organizations have a proper sales commission system in practice. It is important to track commission payments to regulate the process and make it effective.

In this blog, we will be discussing some ways to make the tracking process effective.

What are sales commission?

Sales commission is a financial incentive given to salespeople when they achieve or surpass their sales targets. It is calculated as a percentage of the revenue generated from their sales activities. Sales commission tracking is the process used by businesses to document sales transactions and calculate the corresponding commissions. This ensures accurate record-keeping and timely payment of commissions. By implementing effective sales commission tracking, companies motivate their salespeople to perform at their best, leading to business growth and expansion.

These are some ways you can track your sales rep’s commissions:

  • Manual tracking:

Traditionally, commission-related data has been recorded manually, including manual computations. However, this process is time-consuming and best suited for small businesses with minimal data volume.

  • Manual spreadsheets:

Another method involves creating and maintaining spreadsheets where sales data is manually entered, commissions are calculated using predetermined formulas, and individual salesperson’s commission earnings are tracked. While this approach is straightforward, it can be time-consuming and prone to errors.

  • Commission tracking software:

To streamline the process, businesses can utilize specialized tools or software designed for commission tracking. These applications offer features such as real-time calculations, data import/export capabilities, customizable commission structures, and comprehensive reporting. Using commission tracking software can minimize errors, save time, and provide valuable insights.

How to make the sales commission tracking process effective?

Here are some tips that could make your tracking process effective:

  • Establish Transparent And Clear Commission Structures:

Ensure that your commission plans are easily understandable by your sales team. Clearly define the commission rates, tiers, and any other factors that may affect the calculations in a detailed manner.

  • Automate The Process:

To fully leverage the benefits of sales commission tracking, it is important to automate the procedure. Automation not only reduces the chances of errors but also saves significant time.

Automated tools simplify complex calculations, eliminating inconsistencies in commission processes. This fosters trust among sales representatives and motivates them to enhance their contributions to the company.

Automated tools are flexible and can easily adapt to changes in commission calculations. Their adaptability makes them highly valuable and efficient.

  • Aligning Commissions and Sales Goals:

 Make sure the commission structure fits with the aims and objectives for sales at your company. The commission scheme ought to encourage the desired actions and results. For instance, you might wish to give more commissions for selling particular goods or hitting predetermined sales goals. To keep the commission structure motivating and relevant, examine it frequently and make changes.

  • Establish Realistic And Achievable Sales Goals: 

Set difficult yet realistic sales goals. Salespeople may get demotivated by unachievable goals, while complacency may result from goals that are simply within reach. When establishing targets, take into account past sales data, market trends, and individual sales representative performance. To keep things fair and motivating, assess your goals frequently and make adjustments.

  • Provide Accurate And Timely Reporting:

 Deliver sales associates with accurate and timely commission reporting. These reports ought to provide a breakdown of their sales results, commission distributions, and commission computations. To make the data more comprehensible and accessible, use graphs and visualizations. Regularly scheduled reports help foster confidence and enable sales people to efficiently monitor their success.

  • Education and Training of Sales Representatives: 

Provide sales representatives with thorough commission tracking training and continuing education. Make sure they comprehend the commission structure, how it is changed, and how to read commission statements. Refresh their knowledge frequently, and handle any issues that arise.

  • Monitor And Assess Each Step: 

Keep an eye out for any potential problems or inconsistencies by routinely monitoring and auditing the commission tracking process. To guarantee accuracy and compliance, periodically evaluate the commission’s data, calculations, and reports. The commission tracking system’s integrity is preserved and sales representatives’ trust is increased as a result.

  • Streamline The Procedure

All stakeholders may easily manage and use a streamlined process. The process can be effectively simplified to ensure that sales representatives are not concerned about their commissions.

  • Simplify The Calculations

The calculations should be made as easy as possible to streamline the procedure. With the numerous software programs available, this is feasible. The software quickly extracts data from spreadsheets and computes sales rep commissions. It speeds up and eliminates errors in the process.

  • Real-Time Updates:

To ensure real-time updates, it is crucial to have a flexible sales commission tracking process. This becomes easier when there is connectivity with a Customer Relationship Management (CRM) system.

Even when dealing with large volumes of data required for calculations, there will be no delay in commission payments. Monitoring and tracking the process effectively is also made simple.

Conclusion

Sales commission tracking software has the potential to revolutionize commission management in businesses. By implementing tracking software, businesses can significantly reduce the administrative workload associated with manual calculations, data entry, and record-keeping. The software automates commission computations based on predefined rules, ensuring accuracy and minimizing errors.

With the software, salespeople can easily access their commission statements, track their progress, and understand their earnings in real-time. This transparency builds trust and provides motivation to the sales team. Moreover, the software generates comprehensive reports that offer valuable insights into sales performance, trends, and commission payments. This empowers organizations to make informed decisions based on data analysis.

Business values can heavily influence your brand identity and how outsiders view your company. It is therefore imperative that a company has very firm values and the same is embodied in all aspects of their business.  

Let’s begin with a quick recap of what we know about values. Values are individual belief systems that motivate people to act one way or another. They serve as a guide for human behaviour. Generally, people are predisposed to adopt the values that they are raised with. Ethical decision-making often involves weighing values against each other and choosing which values to elevate. Conflicts can result when people have different values, leading to a clash of preferences and priorities. Some values have intrinsic worth, such as love, truth, and freedom. Other values, such as ambition, responsibility, and courage, describe traits or behaviours that are instrumental as a means to an end.  

As an individual, values essentially serve as a guide to growth and development. They help us create the future we want to experience. Much like individuals, organizations also need values directed towards a specific purpose, be it growth, development or business success. These cannot be attained in the absence of a strong value-based organizational culture that embodies it’s core values. 

Strong value-based work culture is a precursor to business success 

Organisations are involved in making hundreds of decisions every day. The decisions they make are a reflection of their values and beliefs, and they are always directed towards a specific purpose. That purpose is the satisfaction of organizational needs. Organizational values reflect how your organization operates in the business world. Successful organizations develop and follow their organizational values. 

For instance – Walt Disney; it is not just among the most recognizable brands in the world, they also are the kindest community on the planet. A brand which is almost synonymous with magic, Disney extends the magical experience even to its employees as a part of the company’s culture. (quoted from surveysparrow blog-7 Fabulous Organizational Culture Examples You Can Learn From!) 

What Sets Them Apart: Unparalleled heritage, pride and culture, wonderful community, amazing growth opportunity, and a creative atmosphere sets them apart, says a Disney employee.  Disney only hires people who align with what their brand stands for. The organizational benefits of being a Disney employee include access to Mickey’s Retreat (an exclusive area accessible only to Cast Members and their families), generous discounts on Disney parks, hotels and merchandise, incentive schemes and private healthcare. Takeaway:  Disney strives to make every place the happiest place to work and is compassionate towards each other. People can tell when their company cares for them and in Disney’s case, employees care back! 

It was Peter Drucker who famously said that Culture eats strategy for breakfast’. No kidding. A work culture can absolutely be the deal-breaker or decisive factor when it comes to defining a company’s success. Great company culture just doesn’t happen on its own. It’s more than mere fun and games. It’s beyond the inspirational quotes and artwork chalked onto the pillar, glowing customer recommendations lining the walls, and bean bags littered across the floor. All that is nice and makes life more pleasant, but it does not change the core of who you are as a company. Great organizational work culture is more than paychecks, fun, and perks. 


HOW TO CREATE A CULTURE AROUND YOUR CORE VALUES
 

Company culture is a difficult concept to put into words but it is synonymous with your business environment. Good company culture takes years to develop, but there are some steps that you can take today to get this plan in motion: 

 

1. Pin Down your core values:

Alright! First things first, you need strong core values to set up the base for your company’s culture. Your core values need to be established and ingrained in your company if you are to have a successful company culture. If your core values are not defined, there will be no culture. In the absence of a defined culture, organizations usually form their own culture, which is not based on values and best practices. This can be detrimental to the business image in the long run.

“When I began my startup, I did not have any set values. Personally yes, I had a set of values I operated upon, but however, it didn’t seem necessary to establish company values at such an early stage. Eventually, my business grew and so did my team. I now started seeing the challenge of encouraging the team to make decisions, based on the values I personally embody as guidelines. This became an even bigger challenge with employees who operated remotely. I finally realized the importance of having set company values. However, I kept putting it off since I didn’t know where to begin. But once I sat to actually pen down Moneyjar’s values, it didn’t take more than 15 mins” – Rohan Agarwal (Co-Founder Moneyjar) 

 To create your business values, think about your personal values, business objectives and align them to match it with your workforce potential. See which value-based decisions have kept you on your growth track and which have helped your employees perform better. Keep the ones that serve your indicators of success and match the goals you have chalked out for your business. A quick search on google with also reveals a great set of values you can imbibe.  Go ahead if that suits you, however, remember your values must be tailor-made and should not be more than 3-4 in number. 


2. 
Identify behaviours that demonstrate these values:

Once you have nailed down your core values, you must bring it into action. Sometimes organizations may be operating under unspoken core values, communicate them formally to the workforce and practise it daily. Daily reinforcement is the best way to form a habit. Identify touchpoints to remind them of these values. Everyday things like setting business hours, determining employee benefits and internal communication with employees, reflects your culture. So, ingrain your values in these decisions from the start. 

Establish Key Behavioural Indicators that demonstrate your core values. For instance, If you are a customer service based company which has adopted “Going the extra mile to achieve customer satisfaction” as a core value, your employees must embody the same value and must be willing to go that extra mile whenever the opportune moment surfaces. 

For example, you have probably heard of the Ritz-Carlton, a hotel chain known for their great customer service. On one particular visit, a mother together with her two children had spent a few days there on vacation, and when they got back home, her son discovered that his beloved stuffed giraffe, Joshie, had gone missing. The boy was devastated, so his parents decided to tell him that “Joshie is just taking an extra-long vacation at the resort.” This conversation was overheard an attendant at the front desk and he took it upon himself to ensure they leave happy. That very same night, the Ritz-Carlton called to tell them that they found Joshie. The relieved parents asked if the staff would mind taking a picture of the giraffe at the hotel to authenticate a fabricated “long vacation” story. After a couple of days, the parents received a package with Joshie and a bunch of pictures that proved Joshie’s prolonged holiday. (quoted from Brand24 blog) (once again keep the formatting same across sections and while quoting another blog also add the link) 

Organizational culture depends largely upon the behaviour of its employees. So you must ensure that employees behave in a fashion that resonates your core values. Not just existing employees, but even new hires should be done keeping in mind the core values, so it becomes easier to integrate them into the organizational setup. Many companies have started carrying out an interview with a culture fitment angle to ensure the right candidate is hired.
 

3. Induct all employees into the values: 

When bringing on new employees or when you update your company values, don’t skip onboarding and training. These are great opportunities for you to set the tone. Talking about your core values periodically can also help you to implement them in your corporate culture. You can send out monthly newsletters that showcase employees who are successful in following your business’s values. Also, you can bring up core values in goals meetings and determine whether you are reaching goals., You can discuss core values during employee performance reviews. Don’t let them get cosy in the corner of your small business. Frame them and hang them on the wall for employees and customers to see. Post them on your website, on your social media pages, and on any other digital front, you can. Many companies proudly display their core values on video walls or television screens in the frontal view of the office, to ensure both employees and customers understand them. Customers/ employees can get an idea of what the organization’s culture will be like basis the values displayed and take decisions accordingly. 


4. Reward employees when they act as per the desired behaviour:

So the values are set, the employees are inducted and business is great! It’s no wonder these thoroughly thought out core values worked like a charm. If you’re thinking you’ve created your business Utopia, think again! Is it enough to just establish a successful culture? Employee Recognition plays an important role when it comes to building a company culture. Once the values are set and let’s say employees strive to adhere to them, then as an organization, it becomes your responsibility to recognize these efforts and reward these behaviours. These values help gauge the performance of employees and recognize their efforts in order to keep them engaged. Acknowledging and rewarding value-based behaviour encourages the employee to perpetuate this behaviour throughout his/her tenure with the organization. When these behaviours are rewarded it creates an emotional connection between the employee and company and they achieve a state of synergy and eventually attain employee engagement.  

 In today’s day and time, employee recognition can be also done digitally which also allows business owners to track individual performance and measure it against core values and reward employees. Such unique platforms provide superior employee engagement, not just among superiors and subordinates but also enhance peer-to-peer engagement. For instance, Let’s Buzzz platform allows peer-to-peer employee appreciation model, where employees across departments and ranks appreciate and recognize fellow employees for demonstrating certain behaviours by buzzing about it and thereby creating a chain reaction of acknowledgement and occasionally nudging whenever a core value is displayed, which in turn leads to driving a value-based culture. Core values are beliefs your business must follow in all aspects of its operations, be it marketing, human resources, administration and finance. They guide decision-making and define what your business stands for. But, if you and your employees fail to uphold your core values, you could face bemused or disappointed customers.  

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