5 Reasons to Reduce Sales Commission Disputes

If you're an executive at a large enterprise, there's one thing you should know: sales commission disputes are costing your business money. And the more of them that exist in your organization, the higher the cost.

Here are some of our best arguments to help you convince leadership this is a serious issue that needs investment.

1. Sales commission disputes erode employee trust

Sales commission disputes erode employee trust because they often lead to disagreements and bad feelings between sales staff, management, and the sales compensation team.

Related article: How to Resolve & Reduce Sales Commission Disputes

Trust is a critical part of the employer-employee relationship, and that hinges on the money-value trade-off. Screwing up their pay will make employees lose trust in your business processes, reducing productivity and engagement across your organization.

2. Commission disputes cost top talent

One significant impact when there's a loss of trust in an organization is that top sales talent move on pretty quickly. Salesforce turnover significantly increases when there are ongoing pay disputes.

Top performers expect the best, and repeated shoddy accounting just won't cut it with them. They take pride in their ability to earn significantly more than their peers and will view you as trying to prevent them from getting what they deserve—especially if it happens repeatedly. They won't have any problem leaving or calling you out about it publicly, which creates a hostile environment.

3. Ongoing disputes makes hiring harder

People talk—especially salespeople. If your organization gets a reputation for screwing up people's pay, it's going to become increasingly challenging to replace top talent and make hiring even average salespeople more of a challenge.

4. They take up valuable time

We've heard horror stories of salespeople who have spent hours—or even an entire workday—going back and forth with human resources or sales operations over small amounts of commission. That's time wasted on both sides of the conversation.

Time spent resolving commission disputes is utterly valueless time. If anything, it's a negative. But there's another hidden cost that's a consequence of repeatedly inaccurate payments: shadow accounting. Shadow accounting is where salespeople keep their own books calculating their commission payments because they don't trust their organization to do it correctly.

That is particularly costly over the long term because a salesperson's time is worth the future revenue they could generate, not just their salary.

5. Sales commission disputes cost much more than you think

Every item in this list is a cost to a business in some way. But sales commission disputes are a symptom of a much more significant cash leak for a large organization.

Related article: 3 Hidden Costs of ICM Software Ownership

The truth is, 95% of people won't say anything when they've been overpaid. But 99% of them will say something when they've been underpaid. If your organization is regularly dealing with complaints about underpayment from sales reps, there is a good chance that you are overpaying reps too, and just never hearing about it.

Reduce Sales Commission Disputes at All Costs

Sales commission disputes are a screaming klaxon that you're leaking cash through inaccuracies elsewhere in the payroll process. And that's real cash running out the door. Ignore this red flag at your peril.

Sales may be considered an art but sales performance management is a science. Understanding the root causes and broader impact of seemingly minor issues like incentive compensation disputes is how we drive growth in a large enterprise.

Working to reduce inefficiencies and error rates, which will minimize sales commission disputes, should be a cornerstone of any serious enterprise growth strategy.