We work with a dealership that has implemented fantastic changes and in doing so increased their gross profit considerably over the past two years. The additional gross profit isn't necessarily due to increased volume through the door and more so due to tweaks with policy, procedure, etc. The countermen's pay plans are mostly commission based with some salary; the plans have not been altered since before these changes too place, so, their earnings are projecting to be much higher than the industry averages. Keep in mind that due to how we created this additional revenue, the workload within the department hasn't increased at the same rate as the gross profit.
Question is, when the red flag goes up and the GM says "John Doe made how much last year!?", how would you handle that situation? Anyone willing to share their pay plan strategies?
An argument would be that departmental personnel expense to gross percentage as well as total expense to gross is on-par with the industry benchmarks; the sales / gross figures per employee are also being met or better. So, as is, no changes are technically necessary. However, I do understand that striving to increase net gross is important for the company, and there should be some limitation on wages for a position when all things are considered. Considering doing a forecast then presenting a capped commission plan with fixed salary and a monthly bonus potential based on YOY growth or other metrics. I don't want to get away from commission all together because the incentive to hit benchmarks would be lost for some.