DealersEdge Professional Forums

Does anyone have a program in place for employee incentives based off sales? Our GM wants me to come up with something for our store. I've never been a part of something like this in all my career so I'm not sure how set it up. Should I base it off of gross sale % or gross $ ? And should there be a tier system or all or nothing?

Decades ago, when I first started in parts I was on a tiered commission program. The biggest problem with it - at that time - was I had no way of confirming the numbers. Therefore, I would suggest if a tiered system is put in place it MUST be transparent to the employee. If not, there becomes mistrust and suggestions of program manipulation. Heard of this at other stores as well.

Also if the tiered system pays well the management has to be okay with paying out the money if it is hit often. Changing the tiers later is a problem for employees and will quickly backfire.

If done properly - it will work. We have some tiered programs in place for service people.

Take a page out of tech software sales book
Do an On-Target Earnings, give your guys a max number too look to based on hitting targets such as personal and team gain on gross profit for a month/ quarterly/ yearly.
Specific parts sales such as, alternators, performance (if you're into that)
Even tech sales reps don't hit their OTE (people at google, amazon, and other big tech) only maybe 30-50% hit their goals.
But you could use it as an incentive.
Your top guy would make $80,000 if every month they hit 3% Y-over-Y, obsolescence is below 5% total, etc.
Food for thought

We are a smaller dealer and use incentive based pay.

If we gross 10K for the week, it's an additional 50.00.
For every additional 1k, it's another 25.

Before COVID, we would average 13-15k/week. Now it's, approx 25k/week. SO, The countermen can make some good money.

When I was a teenager, my dad owned a small Chevy dealership. As a joke, I bought him a desk plaque that said:

New incentive plan:
Work or get fired

Thinking back , I doubt the employees saw the humor in it.

I only have 1 counter guy, he prolly does 60-70% (I take up the slack/busy spurts) of calls and counterwork, He gets a nice hourly rate, and 2.5% of GP before expenses, and he is worth every penny of it.

I have my counterman setup on a tiered system and my guys really like it. They receive a good hourly wage plus they receive a percentage of the total parts department gross profit before expenses. The higher
the total gross profit of the department the higher their commission percentage goes up based on a tier factor. Example would be from 1% up to 1.5% of total department gross, and so on but it is capped at a high number that can be reached but not often. I do not believe in paying my counter guys off the net profit (gross after expense) because they often have no control over the majority of the expenses. A pay plan should be easy to understand and straight forward and you only want to pay your people on factors within their control otherwise the pay plan will not work properly. I would not ever pay based on sales numbers or net profit for any parts employee. I would also make sure that if the department growth really explodes and goes way up, you are still able to pay your people with their current pay plan you created because if you start pulling back their pay because "things are to good" you will anger them and it will probably cost you employees! I know from experience seeing this happen many times.

Thanks everyone! I think I've got some great ideas to work with.