Commission payment errors cost employers millions

Poorly-managed commission schemes can lose employers millions of pounds each year.

According to research carried out by market research firm Vanson Bourne on behalf of consultancy OpenSymmetry, 24% of the 153 UK sales directors surveyed said they regularly see errors of more than 10% of the total amount of commission paid. This is despite more than a quarter (27%) spending over £50million on commission annually, 24% stated that they regularly saw errors of more than 10% of the total paid. A further 20% said they didn’t know what errors occurred when paying out sales commissions.

Just over a third (34%) of respondents said they do not have a single system in place to handle commission calculations. Of those which do have a system in place, more than half (54%) rely on a solution built by their organisation’s IT department. Less than a third (29%) said they had customised third-party software installed, while 12% use an Excel, or other spreadsheet-based, system.

Just over a quarter of respondents said that their commission compensation plans effectively motivated their sales staff. Just over half (52%), meanwhile, said they regularly had to deal with queries and complaints from employees, while 63% said they worried ‘occasionally’ or ‘frequently’ about the accuracy of their sales commissions.

Nearly half said they intend to review their commission policies in the context of the economic downturn and more than two thirds (68%) said their sales compensation plans needed improving in order to keep up with the changing business, market, or complaints.