Discussion
I work for a UK electronics manufacturer as Sales manager. My contract (7 years old) agrees a sales bonus paid at 1.5% once a quarterly target has been met, for the last 3 years this has been £750,000per quarter giving an annual target of £3,000,000.
Our financial year runs from 1st of December, so we are at the end of Q1, and no target has yet been discussed. We have just received an order for £4.2 million pounds, in addition to the probably £1,000,000 we have already invoiced in Q1.
A brief, discussion yesterday with one of the co-owners of the company went along the lines of, "we need to talk as we are doing away with the bonus scheme, but if we take the "big" order out of the equation, you'll need to do another couple of million this year, to get a payment.
Ok, so this raises a few questions. Why would we take the big order out of the equation ? Clearly, he can now say the target for this year is £8 million (based on that's what we are likely to do), and therefore no bonus would be payable on a great year, but agreeing a target at the end of Q1, is a great way of moving the goalposts.
Any new contract would have to be agreed, so what should I do ? This seems to me at least grossly (no pun intended) unfair, we've had a couple of lean years, but now we've got a good year looming, they appear to want to change the rules.
Our financial year runs from 1st of December, so we are at the end of Q1, and no target has yet been discussed. We have just received an order for £4.2 million pounds, in addition to the probably £1,000,000 we have already invoiced in Q1.
A brief, discussion yesterday with one of the co-owners of the company went along the lines of, "we need to talk as we are doing away with the bonus scheme, but if we take the "big" order out of the equation, you'll need to do another couple of million this year, to get a payment.
Ok, so this raises a few questions. Why would we take the big order out of the equation ? Clearly, he can now say the target for this year is £8 million (based on that's what we are likely to do), and therefore no bonus would be payable on a great year, but agreeing a target at the end of Q1, is a great way of moving the goalposts.
Any new contract would have to be agreed, so what should I do ? This seems to me at least grossly (no pun intended) unfair, we've had a couple of lean years, but now we've got a good year looming, they appear to want to change the rules.
It is unfortunately bad management practice. The best solution is probably to manage the situation upwards as best you can; use all your objection handling sales training. Read your contract carefully. Do you actually have a fixed incentive percentage based on turnover or are the figures you gave just for the year you joined? Is there any wording that states the incentive scheme can be varied or targets varied/agreed? How has the scheme paid out in the preceeding 7 years? Has there been any subsequent incentive scheme documentation, perhaps a payout letter, that varies the original terms?
Even if you have a contractual entitlement to what you describe, enforcement is a different matter. The business may vehemently object leaving you no option but to pursue a claim. On the other hand, depending on your tact and approach, they may agree with you and reward you handsomely. Only you know the attitude and likelihood of reaching this point.
Even if you have a contractual entitlement to what you describe, enforcement is a different matter. The business may vehemently object leaving you no option but to pursue a claim. On the other hand, depending on your tact and approach, they may agree with you and reward you handsomely. Only you know the attitude and likelihood of reaching this point.
tezzer said:
Our financial year runs from 1st of December, so we are at the end of Q1, and no target has yet been discussed. We have just received an order for £4.2 million pounds, in addition to the probably £1,000,000 we have already invoiced in Q1.
Maybe the ignoring of this order is to prevent the sales guys slacking as the previous yearly target has been smashed in quarter 1, so 3 quarters of naff all is required to get your bonus. A proposal would be that the exceptional order only counts if the sales are £3 million above the previous targetdiscuss it does this big order mean the business is at capacity or is there still saleable capacity? If you can still sell stuff and the big order hasn't altered teh environment you are selling in then I'd look to negotiate that the amount of the order above the normal target is ignored until the normal years target is achieved.
Is the large order a one-off thing that happens once in a blue moon or something that can be repeated year on year?
We have a similar situation this year where our business target is X for the financial year, but we have pulled in a special one-off project that beats our target twice over.
The higher-ups have decided to split the business accounts in order to track our standard day-to-day work and then track the special job as a separate entity.
The positive side is that it doesn't dilute the figures and give you an unachievable target next year. The neative side is, well, you're experience that at the moment. The bosses can/will take the special order out of the equation and still insist you hit your target using standard projects.
We have a similar situation this year where our business target is X for the financial year, but we have pulled in a special one-off project that beats our target twice over.
The higher-ups have decided to split the business accounts in order to track our standard day-to-day work and then track the special job as a separate entity.
The positive side is that it doesn't dilute the figures and give you an unachievable target next year. The neative side is, well, you're experience that at the moment. The bosses can/will take the special order out of the equation and still insist you hit your target using standard projects.
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