Creating The Right Terms for Commission Structures

One of the most effective ways to expedite growth is having a commission structure for employees or agents. Commissions allow people to go the extra mile and get more leads or better contracts, ultimately letting the company earn higher profits. What should you consider when writing a commission structure? And when is it the right time to promote profit-sharing and equity over commissions?

In this episode, Matt Smith and Jean-Luc Johnstone share their thoughts on the pros and cons of commission-based work. They explain how owners can ensure a balanced commission structure for both agent/employee and the business. They explain how to create a tiered structure and establish attainable KPIs. They discuss the differences between commissions, profit-sharing, and equity, and explain when to use one over the others. We also discuss the importance of testing your incentive structures and the best way to go about it.


“Too low commission doesn’t encourage growth; too high leads to lower job security.” – Matt Smith


This week on the Expensive Advice Podcast:

  • Discussing commissions with your agents or employees
  • Can employees rely on discretionary bonuses?
  • The importance of making your KPIs clear, achievable, and measurable
  • Getting the right balance in commission structures
  • Establishing a tiered structure for commissions
  • When to start a profit-sharing incentive contract
  • The difference between commissions and profit sharing
  • The best way to test your incentive structures
  • Mechanisms you can use to transfer equity
  • When to use “Phantom Shares” as profit-sharing incentives


Connect with Matt Smith and Jean-Luc Johnstone:


Turning Boring Money into FUN Money

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