I thought it would be helpful to share some information about the main commission system types that exist in the Japan recruitment market.Second System is:
Personnel Draw Based Commission System
A personal draw commission system can be usually defined as:
- You are paid a % of the revenue you generate in a specified period of time.
- This % could be a fixed percentage
- The % could be an increasing % applied to different revenue thresholds when they are hit and or surpassed
- The higher % may be calculated just for the revenue within the different bands or is sometimes paid when hit as the higher % retroactively on all the revenue generated to date in a quarter
- Usually paid quarterly or monthly
- The system will use your monthly base salary amount as the mechanism(Draw) to calculate the commission owed to you
- This is usually applied one of two ways followed:
- % of quarterly revenue generated minus your quarterly cost(draw) = your total gross commission payout
- or
- Quarterly revenue generated made minus your quarterly cost (draw) then % applied against the remaining revenue amount to calculate your gross commission payout
Pro’s
- Simple to understand and easy to calculate
- No politics or personality involved; you are paid what you earn
- %’s can be very good and lucrative depending on the company
- Can drive high individual performance
- Establishes a high-performance culture
- Can have increasing %’s which kick in at higher levels of revenue
Con’s
- %’s can be too low to clear your draw(cost)
- Can create a more individualistic and less collaborative internal culture
- Less sharing of knowledge and information within teams
- Rolling draws(costs) that go on for too long or have no limit, so you are always playing catch up if you have a bad quarter
- Overly long wait for actual payouts
- More difficult to develop long term people management layers
