MAJOR pay cut
Five years of building up business for a company, started at $50k in sales the first year (I made right under $20k) and last year I sold $345k and made $116k. Now the company says that I made too much that I' am being paid higher then other markets and they are cutting my pay roughly 66%! I get a salary plus commission, they hold back or were holding back $8k each month of sales and I was paid commission after that was taken out typically 33%. So yes, you are reading that right...I sell for the month $38k worth of ads, I get paid commission for $30k plus my $38k salary. They said that typical reps that sell $350k worth of ads only make $77k so that is all I should make. My pay plan has been totally changed. Come to find out they are taking my salary out of my commission. Now they are going to take $14,505 each month from the ending total sales and what is left I get paid a 22% commission. So, if I sell $16,505 I will only get paid commission on $2k plus my salary. I tried a counter offer but, they are stuck on the whole "market pay" thing. There are three other employee's that also get some sort of a commission they are in other departments one is somewhat similar to me with being business to business. He gets a fat salary and commission off of everything he sells and no he is not getting a pay cut. This will be the first pay cut, typically they freeze your pay until the "market" catches up with it. This is currently happening with some of our union employee's. This has been devastating to say the least, my commission check for last months sales is going to be $4,900 the way I was getting paid previously it would have been $9,800! Any thoughts? Has anyone else gone through this? I' am in the middle of putting together my resume and I' am in contact with an attorney.
Yeah, my first thought is to find yourself another job & fast! This is ludicrous--you are being penalized for being super productive and bringing money into your company! Remuneration for sales jobs that have commission attached to them is NOT "market driven," they are driven by the productivity of the individual in the position--the more you sell, the more you make. For your company to cut your commission so that you make the same amount as salespeople who are less productive is asinine. If they "think" your base salary is too high, then it's their fault for setting it up that way to begin with!
Once you have another job lined up, I would tell them that you'd be happy to sell just $30k of ads each month instead of $38k, so you will be working commensurate with what you are being paid.
Get out of there as fast as you can go. Why would you even want to stay there after this?
I would suggest the first thing you do is to look at the same job at other companies and see what their salary/commission plan is. You can do this by applying for these jobs or through friends.
It may be a case where your firm actually did "overpay" based on what the market pays and is trying to get back in line. In this case you will see that no matter where you go, the pay will be about the same.
But if you see that other companies compensate you more fairly (a subjective term in this case), you should move on. Companies like this are short-sighted.
As for the attorney, I don't think you will get anywhere. Companies change commission planss all the time. Better to find a job and move on without burning a reference bridge than trying to get your "pound of flesh".
Sales and commissions is not my area of expertise, however, I do know that companies often have different commission structures for different types of sales. As a simple example, hundreds of years ago when I worked in retail, regular employees received 1% of sales, however, employees in the big ticket departments (appliances, furniture, etc.) received 3%. This was because those people didn't make a sale every day like someone working in baby clothing did.
Likewise, I used to work for a stockbrokerage. Different sales people in different departments received different commission percentages. In some cases it was because they did different kinds of sales, in others it was because they negotiated for lower salaries and higher commission since the market was running high when they were hired. That was not a great plan after 9/11 and many of them took a tremendous hit at that time.
So, I don't know if they can change the rules while you're in the middle of selling or not (I'm sure a lawyer can clear that up), but I'm pretty sure they can change the rules for the future if they want to. It may be time to move on.
Tess
Keeping in mind that it's always better to look for a job when you have one, I'd quietly start a job search and see what sort of offers come your way. Based on what you wrote, sounds like you're getting hosed.
Paul W. Barada
The Negotiation Expert