Question about commissions or bonuses for Community Managers

[Irene Kavanagh]

Hi- *I posted this on the Coworking Leadership Slack team so if you are there, I apologize for the redundant post. I'm exploring commission and bonus structure for a couple of clients right now. I have traditionally shied away  from using commission for community based coworking spaces because I was concerned about the impetus to sell rather than the impetus to create community.  At this time, I'm exploring this option for two clients who, for various reasons, would not be at risk of those concerns.  Does anyone have experience with using commission as part of the compensation package?  How have they worked for you?  How did you structure your commissions?  Was it based on percentage of revenue or percentage of salary?  What tiers do you work within? Thanks in advance for you thoughts! Warmly, Iris __ Iris Kavanagh MOBILE  831.824.4255 VISIT : coworkingwithiris.com  TWITTER: @iriskavanagh LinkedIn:  http://www.linkedin.com/in/slickiris Schedule time with me here

[Alex Hillman]

Rather than think "community vs sales" I'd think short term value vs long term. Short term incentives are heinously positioned to get people doing all of the wrong things. Instead look to long term value like x per member who has stayed 6, 12, 18, 24 months etc etc.

I also like bonuses tied to new programs/initiatives that clearly generate business value, and explaining why what they did was good for the community and the business. This encourages repeat effort in the right direction.

-Alex

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[Alex Linsker]

I agree with Alex Hillman, if I offered a commission I would want it to pay more if someone stays a member for 10 years than for 10 months.

I don't see any problem with cash incentive to get members especially if a place is already paying cash for someone to do other things that members could do -- if it actually incentivizes.

Other than business partners who are cofounders or buy the business, I haven't heard of commissions working for coworking -- the $ per client is usually so small compared to traditional leasing, unless you have a bigger company, in which case a broker prefers a prepaid commission on a 5 year lease. Do any coworking places do 3 or 5 year leases, where the client and coworking venue is locked into an agreement?

[Bernhard Mehl]

I think generally a good idea IF you can get a better quality community manager (e.g. former entrepreneur, etc) for the job - similar to the comment Alex Linsker had that where he sees it mostly with partners, so the goal is to have a high end community manager :) 

However those I'd rather incentivize based on business goals. To hit the business goals one way is to get on average more members, etc

[Alex Hillman]

To be clear, the problem with the incentive to "get more members" is that it puts the community staff in the position to tell someone they KNOW isn't a good fit that they should join anyway. This isn't just a vague "concern" it's a leading problem among spaces and staff that I have advised.

That's why I think it's so important to tie incentives to retention rather than directly to sales.

Alex

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[Iris Kavanagh]

Thanks for the great responses, everyone!

In general, I'm not a fan of the idea of using money to incentivise employees. Personally, I'm not incentivised by the idea of commissions on sales, etc.  

That said, when a space is looking to hire a really good CM, and is in a market with a high cost of living, an alternative compensation plan can be the difference between being able to get the really good CM and not being able to. 

At NextSpace, we considered offering a percentage of revenue from paying events as a way to allow employees additional income and compensate them for the many late nights and weekends they were working in event heavy times. We ultimately decided not to do this because in figuring it out we decided it took us away from our goal of being for the members in everything we did.  

I agree with Alex that the best case would be to offer commission based on length of membership. For coworking, this seems to be the purest form of compensation that aligns with the value of creating lasting relationships amongst people. This is also the most confusing to figure out! Below is what we are leaning toward:

Monthly bonus, based on % of roral revenue:

Revenue %	Bonus %	Monthly $ (based on 38,000mo)
70%	2	$53, $636 year
75%	5	$143, $1700 year
		etc

Quarterly bonus, based on quarterly profits (profit sharing model):

Bonus %	Profit % (Based on quarterly average $15,900)
1	$159
2	$318
3	$477
4	$636
5	$795
6	$954

Thanks again for your thoughts!

Iris

[Barbara Sprenger]

Hi all,
We really like using bonuses. Our center managers get 5% of profit each month. It's a good way to incentivize -- it says you're sharing in what the center produces, your input is valued, it's not just for generating a sale, it includes running an efficient center and keeping people. We started with this and haven't found a reason to change!

Barbara

[ir...@iriskavanagh.com]

Thanks, Barbara! After sleeping on what I posted yesterday, we decided it isn't right and are now moving toward a tiered profit share. I'll post the formula once we land on it. 

Warmly,

Iris

Iris Kavanagh

Work Happier

Coworking. Collaboration. Community. 

Sent from my iPhone

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[Barbara Sprenger]

Yes, we just kept it simple. At the higher end, it’s really significant; at the lower end, you see where it can go!

Barbara Sprenger

 bspr...@thesatelliteinc.com

  www.thesatelliteinc.com

  831-222-2101

[Alex Hillman]

Hell yes to simple profit shares :)

For another perspective, I've been on the receiving end of profit shares, in a few models. The best ones where upsides were mutual and clear were simple capped %'s, aka 5% up to a certain max.

It kept the math simple, expectations simple, and the best case scenario is mutual: I'm maxing out the profit share and now we know that a) I can perform and b) everybody wins when I do.

Yay!

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[Scott Tillitt / BEAHIVE]

Alex, why the cap? Doesn't that also max out the incentive to outperform?

scott.

[Barbara Sprenger]

I kind of agree with Scott. When I used to be a rep, I hated it when a percentage was capped — I produced more but made less of it. Also, in our business, with high fixed costs and low marginal costs, you’re making more on last dollar, so there really isn’t a reason to cap.

Barbara Sprenger

 bspr...@thesatelliteinc.com

  www.thesatelliteinc.com

  831-222-2101

[Iris Kavanagh]

Barbara- I hear what you are saying about not capping. Are you willing to share what the biggest single profit share payout you've been able to give has been?

[Angel Kwiatkowski]

Iris, late to the party here but I'm anti-commission. Even incentivizing retention can lead to staff retaining for the wrong reasons. I'm all for a total compensation convo that is tailored to each member since it can be hard to provide a comfy living wage to coworking staffers. Maybe one member values a reserved parking space, a membership to Care.com for kids or even a grocery gift certificate to make their lives easier. Never underestimate the value of non-traditional work schedules or comp time off for wonky event hours.

Angel