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Commissions: Stop or Full Speed Ahead?
Is a commission program a carrot to promote good work or a stick that can hurt your dispensary? ECPs weigh in on the pros and cons of commissions
By Karlen McLean, ABOC, NCLC

Some ECPs have never implemented a commission plan and say they never will, while others don't have commission programs but are considering launching one soon. Some have discontinued their commission plans while others have highly successful, longstanding commission programs in place.

What works best varies from practice to practice, but an overview of the options follows.

PRODUCT-BASED COMMISSION

Commission based on sales of premium products, add-ons, and multiple pairs of eyewear are common in large retail establishments.

It's important to establish if individuals or the staff as a whole will receive commissions. It's also important to determine what products and services will be commissioned, but to keep the commission structure fluid.

"There are team goals and individual goals, just like there are team sports and individual sports. Both are successful in their own way," says Patti Galko, ABOC, LDO, and director of retail operations for Northeastern Eye Institute in Scranton, Pa.

She also recommends shifting the commission programs' focus periodically. "This helps keep up interest and keeps you out of a rut," Galko notes.

Another important factor is making the books balance. Commissions are usually given when the product is paid for in full, excluding partial payments and holds. Commissions on multiple pair sales are typically done only when the patient purchases multiple pairs on the same day.

Depending on practice policy, if patients return their purchases, the commissions are subtracted.

"Your payroll must be in line, period! Commissions are discretionary pay and are fluid, but the balance sheet must make sense before commissions can happen," Galko says.

Utilize an up-to-date software system that tracks commissions for ease of use (see sidebar on page 58).

PRACTICE PERFORMANCE COMMISSION

Commission programs can go beyond up-selling. They can help keep appointments up and balances paid. Team commission programs have helped keep the private practice of Eric White, OD, in San Diego, Calif., humming for more than 15 years. He determines the minimum break even figure for each month. The staff divides every $2,500 above that. Full-timers get full bonus and part-timers receive half, and each staff member knows exactly what needs to be collected to receive the bonus.

"If my break even point is $80,000 and we collect $90,000, then full-time staff each get $900 and part-timers get $450," White says.

The result? "Our productivity per staff member is off the chart. If we're having a great month, everybody shares in it, not just me. If we're having a bad month, nobody can get mad at me," he says.

Having a vested interest has encouraged the staff to follow up on outstanding balances or late pick ups. If the schedule looks light, they try to fill in appointment gaps.

A revamped structure has brought commissions back to Wilson Eye Center in Valdosta, Ga., after a nearly 10-year lapse. The old system ended when figuring item-by-item and employee-by-employee commissions became too time consuming.

Today they use a computer tracking system to keep things organized. "We changed to a structure that relied on the business exceeding a base gross amount monthly," says Shirley Enfinger, LDO, operations manager. "The business is more profitable and employees feel good presenting products knowing they're educating patients."

In the "con" column: commission programs may damage employee relations. "If one employee waits on a patient with add-ons, and another employee waits on a patient who only wants the basics, there may be animosity between the employees," Enfinger says.

NO COMMISSION

Reasons for pulling a commission plan may include staff shortages, time demands, practice growth or shrinking, paperwork, or a score of other reasons.

Tom Hicks, LDO, owner of Oxford Opticians in Oxford, Ohio, discontinued his commission program. Although it did increase the sale of extras, Hicks decided that in a small business with few full-time employees it wasn't worth the management challenges.

The balancing act between commission and sales became problematic. It was based on sales of coatings, AR, and other extras, plus 10 percent for full-priced second pair sales or five percent on second pairs if a discount was given.

"On the first sale they'd get a commission, while they might undersell the second job by 25 percent, and give a discount. Not good for the company, but the employee still expected commission on the first job," Hicks says.

If the program was revived, it would be on different terms. "I'd change it to dollars per unit. If the unit were under a certain dollar figure, there would be no commission. This might change employee thinking on discounts."

"We've never had a commission program, nor ever plan on having one," says Diane Charles, president of Woodlawn Optical in Redmond, Wash. "I believe in having a well-educated staff who can educate patients according to the patients' needs, not their pocketbook."

This hasn't hurt the business, Charles notes: "We give bonuses every quarter, based on net sales. It's an incentive to save money as well as make sales. Because we hire wisely, pay well, and base bonuses on a solid structure, we have less turnover than other commission sales businesses in our area."