According to the survey statistics of our students, 63% of e-commerce companies mainly adopt the commission system, 25% of e-commerce companies use the commission system for business departments + functional departments' performance appraisal, and 12% of companies mainly use the promotion + performance appraisal system.
For most start-up e-commerce companies, it does make up for the management shortcomings and effectively drives the achievement of performance. However, the commission system is a kind of "lazy government", which only looks at the results and ignores the process. Many store managers often have annual salary of over one million, and some even reach 3 million. As the company grows bigger and the competitive environment changes dramatically, many hidden dangers and contradictions have also been exposed.
In fact, dividing money is not a problem. The problem is that many bosses find that how to manage high-paying store managers and how to motivate the team has become very difficult.
01 "Five Sins " in the commission system
First, the employees and the boss are not happy.
When the performance is poor, or the off-season, or the new store is not started, the "low basic salary + commission" makes employees have little income, so the morale of the army is unstable and the turnover rate is high. When the performance is good, or the peak season comes, employees' income soars, it makes the boss feel very unhappy.
I have heard many bosses complain that performance improvement is not because of the sudden increase in store managers’ personal abilities, but because the company continues to invest money, platform activity resources, peak season traffic dividends or product development, etc.
In addition, when the company had good profits, it felt troublesome to operate according to the net profit commission, so it paid according to the sales. However, when the company suffered losses, the store manager spent money to increase sales, and the commission was still very high. The boss loses a lot of money and the store manager makes a lot of money, which makes the boss even more dissatisfied.
Second, it is difficult to recruit satisfactory talents.
On Liepin.com, the annual salary range of Shanghai operation managers is between 180,000 and 350,000 yuan. For commission-based companies, it is difficult to recruit people if the basic salary is 3,000 or without a basic salary, and it cannot be in line with the talent market. Because the value of talents is measured by job salary, senior talents require higher basic salary.
Third, business development is urgently lacking in talents from major generals.
Employees who were recruited at low basic salary could not become generals after years of training, and could not lead a team, did not understand management, and could not cultivate talent echelons. Because many e-commerce companies maintain growth by constantly opening new stores. As a result, when the company develops new businesses, it can only continue to recruit new people.
Some bosses have been starting a business for 10 years, with a company of hundreds of millions of yuan, and are still personally leading the team, cultivating new people, and developing new businesses. The old store manager who has made great achievements has long achieved financial freedom, has little work and more money, and has already retired.
Fourth, salary is increasingly incentivizing old employees.
Some old store managers have a lot of cash in their hands and gradually lose their passion and fighting spirit. Some old store managers also felt that they were full of wings and went out to start their own business. More store managers are proud of their contributions and have no gratitude to the company. They feel that the company only gave him a salary of 3,000 yuan, but he earned tens of millions of yuan for the company.
Fifth, warlords are separatist and refuse to innovate business.
The store manager with a low salary finally started the store and felt like he was "a wife who had been working as a mother-in-law for many years" and became a vested stakeholder. So, he was afraid of losing, so he only stared at his own acre of land and regarded the store as his own private garden. He neither allowed anyone to get involved nor refused to go to any other new business.
The boss found that not only could not be mobilized by the old store manager, but also could not be mobilized by his soldiers. This is the formation of the warlord separatist situation.
Because the old store manager has a low starting point and a solid mindset, he is unwilling to learn, unwilling to accept new things, unable to think about problems from the perspective of the company's overall situation, and cannot share the same destiny with the company. His personal abilities have also reached the ceiling and become a resistance to the company's sustainable development. This has led to the increasingly fierce conflict between the boss and the old store manager.
02How far can the commission system go?
Nowadays, a large number of management and training institutions are promoting the commission system or rough distribution model. The core idea is to share money, stimulate the instinctive desire for money in human nature, and replace scientific management with material incentives. However, the consequences of this are very serious.
During the after-class group discussion, our students came to a ridiculous conclusion: Never send management to participate in the management class of a certain training institution (the names of multiple institutions are omitted here), because after they come back, they are trying to share money, dividends, and shares, and some directors are even trying to divide the family.
Then, the boss found that when he paid too much money, no one did it, and the boss was busier. Some bosses bought a million-dollar luxury car after learning it, but found that it was not helpful to the business.
We should understand one truth: a simple and crude money-sharing model cannot solve the problem of modern enterprise management! The so-called "wealth is scattered and people gather" is based on a scientific management system!
Since ancient times, business models can be divided into three categories:
One is to do business, that is, to make the difference in trading. The main form is sales and trade, and performance mainly relies on the contribution of a few "super salesmen". In this case, it is reasonable to use basic salary + commission for sales positions.
The second is to build an enterprise, that is, to achieve organizational goals through various functional divisions. Any individual is a screw of the organization, and fighting alone cannot achieve the goal. In this case, the model of rank promotion + job salary + performance appraisal should be adopted to comprehensively consider the individual's contribution to the organization.
The third is to make investments, that is, to earn returns through financial investment. In this case, the income dividend model should be adopted, such as the investment manager team can obtain a 20% share of the investment income.
Obviously, e-commerce companies are no longer a simple business model, and have passed the stage of husband and wife stores. E-commerce companies are complex corporate models with strict organization, clear division of labor and clear processes. Most positions are knowledge-based employees and need to mobilize everyone's professional skills and creativity.
Therefore, a simple and crude commission system cannot scientifically evaluate the size of an individual's contribution, but can easily cause unfairness. For example, a product-driven company mainly stands out by relying on strong design innovation capabilities, but the commission received by the store manager is 10 times the designer's salary, which is unscientific.
In the long run, the commission system is an unsustainable model. For mature companies, no commission system will be adopted except sales positions.
You can imagine: Huawei's annual revenue is more than 700 billion yuan. If it adopts the commission system, it would not be too much to get a 1% commission with Ren Zhengfei, the vice president of marketing who won the world. However, does Huawei have executives with an annual salary of 7 billion yuan? Yunifang's annual revenue is more than 2 billion yuan, and the operation director's commission of 1% is not excessive? However, are there any executives in Yunifang with an annual salary of more than 20 million yuan? The answers are all no.
Obviously, when the company grows bigger and the management is mature, the simple and crude commission system will withdraw from the stage of history. Since sooner or later, then making preparations early, promoting reforms, and improving organizational efficiency and management level are the guarantees for the decisive victory in the future.
03How to break the commission system?
Our research found that if e-commerce companies in first- and second-tier cities have a normal salary of 1 million yuan per year/person, the proportion of salary is between 8% and 12%.
So, the problem is: Since the total salary pool is certain, if the store manager often has an annual salary of over one million, it means that a large proportion of the salary has been taken away by a few people, and the remaining employees can only be low-income and low-level employees. In other words, such a company cannot accommodate more high-level professional talents.
In the end, the company is unable to establish professional functional departments, professional talent echelons, and joint combat between multiple arms, and can only rely on a few operation store managers to drive them. This in turn strengthens the dominance of a few operating store managers, forming a vicious cycle of "monopoly of princes".
Then, to break the commission system, we must break the situation of monopoly of the princes. There are specific strategies as follows.
First, establish a comprehensive salary system of "vocational rank promotion + job salary + performance appraisal".
A combination model that takes job rank promotion as a long-term incentive, performance appraisal as the current incentive, and job salary-based incentives, is also a common model for all mature enterprises.
Second, vertically expand the management level and establish a talent echelon.
Many bosses’ misunderstanding is to spend several years training an operation store manager. Results: First, the store manager relies on his achievements and has the right to bargain for salary; second, if the store manager resigns, it will cause great damage to his vitality.
In fact, the boss’s mission is to “plan people, plan things, and make a certain layout”. To plan people means to establish a talent echelon. Because the talent echelon has 16 advantages, including self-replication, transmission of torch, and mutual substitution, the construction of the talent echelon is almost a one-time and for all.
After the talent echelon is built, new people can be continuously cultivated, substitutes can be made up for each other, and no longer rely on any few people. Only in this way can the store manager's unlimited bargaining power be weakened, and at this time the boss can truly promote the reform of the salary system.
Third, carry out professional division of labor horizontally and establish functional departments.
上一篇文章《电商业绩下滑，你还在死磕运营么？这个打法早就OUT了！》，专门讲述如何从依靠运营单兵打天下，变成依靠产品、品牌、供应链、运营等多兵种联合作战。职能部门的建立，同样会显著削弱对运营店长的依赖，对于公司来说，会显著提升竞争力和盈利能力，这也是一件事半功倍的事情。
Fourth, improve organizational efficiency and synergy, and turn goals into action plans.
Implement annual performance goals and strategic goals to various functional departments, and be good at mobilizing multi-army joint operations from the company level. This will truly reduce the dependence on operations and ensure the completion of annual performance goals.
Some people may worry whether establishing talent echelons and functional departments will increase labor costs? The answer is no.
Our analysis of salary data of mature e-commerce companies shows that the establishment of talent echelons and functional departments makes the company's salary distribution mechanism more reasonable. Avoid deformed high wages and deformed low wages, while the overall labor cost has not increased.
04How can the boss and the old employees win together?
The conflict between the boss and the old store manager is not that the boss is unwilling to share, but because the old store manager "is not worthy of his position."
What is the concept of an annual salary of 3 million? If the salary of Alibaba Group's vice president is not considered stock dividends, it is only between 1.5 million and 2 million. So, can the talent and contribution of this store manager exceed the level of Alibaba’s vice president?
We know that the skills and responsibilities of senior, middle and grassroots managers of the company are different.
The grassroots focus on technical skills and know how to do things; the middle-level team focus on interpersonal skills and know how to lead the team to do things; the senior team focus on conceptual skills and know the direction and strategy of doing things.
高薪老店长的问题在于，他拿着高层的薪水，干的却是基层的工作；只懂得技术技能，只会埋头做事，不会带团队，不会培养人才梯队，没有高层的眼界和格局。更有甚者，故步自封，拒绝学习，拒绝变革，拒绝接受新事物，无法推动公司跟上剧烈变化的市场节奏。
This is called "talent is not compatible" and "morality is not compatible".
After more than 10 years of rapid development of e-commerce, the entire industry has cultivated a large number of operational skills talents. The operational skills of old store managers can be replaced by more professional and cost-effective operation talents at any time. Therefore, the old store manager who is self-proclaimed and proud is actually in a precarious position .
During my communication with many bosses, I found that e-commerce bosses are a group that values friendship and are all thinking about old feelings and tolerating individual store managers to the greatest extent. However, this is not a long-term solution. To achieve win-win results, the first thing to change is the old store manager himself.
First, we must improve our horizons and patterns , and do not worry about gains and losses, and focus on our own acres of land and vested interests; instead, we should look at problems from the boss's height and keep up with our boss's pace; we should become a force to promote the overall development of the company, rather than the ceiling of the company's development.
Second, we must continue to learn and study new majors, new things and new trends , and the development of e-commerce is changing with each passing day. When old revolutionaries encounter new problems, if they do not have strong learning ability and problem-solving ability, they will be eliminated. Most traditional e-commerce operators do not know how to play social e-commerce, do not understand micro-business, and do not understand cross-border e-commerce... This is because they give up learning and have not kept pace with the times.
At the same time, times have changed, and the era of conquering the world by operating a single soldier alone is gone forever. Without higher strategies and the ability to lead multi-army joint combat, you can't go far.
Third, we must improve our management level, know how to lead the team, and know how to cultivate talent echelons . If you can become an excellent coach, impart your years of operational skills to the team, and continuously deliver new talents to the company's new business, then you are irreplaceable.
Fourth, we must be responsible and be brave to innovate . The ceiling of traditional e-commerce is very low, and constantly expanding new businesses, new channels, new products and new brands is the only choice for many e-commerce companies.
What is Alibaba’s management capable of? The most important point is to be able to dig holes (explore new businesses) and be able to take on things (be brave enough to take the lead). As mentioned earlier, the boss has been starting a business for ten years and the old store manager has already lived a retirement life, which violates the basic ethics of modern enterprises.
Therefore, old store managers should actively promote the company's innovative development, share the worries of the boss, share the burden for the company, and continuously create value for shareholders, then you are irreplaceable.
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