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Should you or shouldn’t you? An inside look at the pros and cons of spiffs, commissions, and bonuses

BY ERINN MORGAN

Commissions and spiffs paid on products sold in the dispensary are increasingly common, especially at high-volume chain stores where they’re big business.

These programs can significantly pad an optician’s base salary, which today can range anywhere from $15 an hour for a beginner to more than $20 an hour for a more experienced worker—or more.

According to Salary Wizard’s HR Reported data as of September 2012, the median expected annual salary for a typical optician in the United States is $43,905. Commissions and spiffs can easily add up to tack on thousands of additional dollars to this median on a yearly basis.Which is exactly why those who get them love them.

Specifically, spiffs (commonly held to be an acronym for sales promotion incentive fund or sales person incentive fund) are dollar amounts paid out on the sales of certain products. Examples include a $3 spiff for a premium coating sale or a $5 spiff for a progressive lens sale.

“In the course of a month an optician might earn another $200 to $500 or more on spiffs,” says Bill Nolan, vice president of client services at The Williams Group, a practice management consulting group in Lincoln, NE. “These programs are fairly easy to do and fairly easy to track.”

Commissions, on the other hand, are paid out as a percentage of monthly sales. “In the optical world, these can range anywhere from one percent to three percent,” adds Nolan.

Some offices offer a bonus program for all employees, either in addition to or instead of commissions and spiffs. Bonuses, typically distributed as an even amount to all employees, are generally calculated as a percentage of a practice’s sales growth.

“We do it all.We offer spiffs, commissions, and a bonus program for all 30 store employees,” says Brooke Hawley, general manager at Maple Grove, MN-based Pearle Vision Maple Grove, which employs seven full-time opticians, two assistant managers, five full-time techs and receptionists, three full-time optometrists, and one part-time OD, plus lab staff.

THE DELIBERATION

Today there is some debate over the viability of commission and spiff programs.While some say they are exclusionary because they reward only the efforts of those making the sales, others argue that they are a necessity expected by the experienced opticians whom employers wish to keep.

From her view, Hawley says that paying out spiffs and commissions to a sales staff is the norm. “In this market, they are all used to it. It’s pretty standard,” she says. “If I took away our commission program, they would likely walk. It’s a huge supplement to their hourly wage. I feel like if I just had the bonus program, they wouldn’t be as driven.”

On the flip side, others say there are downsides associated with commissions and spiffs. “We’ve found over the years that commissions and spiffs imply that no one else in the office has anything to do with what happens in the dispensary,” says Nolan. “They create an us-versus-them mentality.”

He points to a large office he worked with on the West Coast as an example. “They had these programs years ago and, over time, the subliminal message was that the most valuable people are those in the optical,” he says. “The optical staff started feeling like they didn’t have to do things like empty the trash or do anything extra because they felt that they generated all the revenue. Eventually, this client had to stop the commissions program and then everybody got really upset.”

Others argue that commissions and spiff programs can also create a high-pressure sales environment in the dispensary. “We’ve all been in the store where the person was more interested in selling than asking you what you really want,” says Jerry Hayes, founder of Hayes Consulting, Red Tray, and HMI Buying Group. “That’s the danger of this type of program.”

Hayes, in fact, has a strong stance against commissions, spiffs, or even bonus programs for an independent optometric practice (with the understanding that a high-volume, sales-oriented chain store may be in a different position). “Independent ODs do not have a good track record with sales incentives or bonus programs,” he says. “Bonus programs work when employees are money motivated, but most people aren’t.You can’t let a bonus program be a substitute for good management.”

At the offices of Drs. Fisher,Yarrow, & Fleming in Wichita, KS, sales commissions are part of the pay structure, but Chad Fleming, OD, says he has seen the practice grow more by implementing a bonus plan that includes every employee. “In the dispensary, we try to give them a commission to give them a little extra income, but at the same time, it changes the office culture,” says Fleming, who is also the business and career consultant for AOAExcel. “We’ve seen that, as a practice, we’ve grown more by getting the whole practice involved.”

Fleming notes that, in the end, it took a group effort to get the patients to add on an extra coating or upgrade to a better lens. “It’s more than the dispensary staff member sitting in front of them,” he says. “It’s what the doctor recommends in the exam room, what the receptionist is talking about, and more. Instead of commissions, I recommend setting up a bonus structure that’s based on the growth of the overall practice so everyone wins.”

THE SPIFF PROGRAM

WHAT IT IS: Spiffs reward dispensary employees with set dollar amounts for specific sales of extras and add-ons (such as AR, progressives, etc.) they make.

PROS: Program appeals to money-motivated, sales-oriented employees who can boost the bottom line.

CONS: Because only dispensary staff are rewarded for sales, this program can be exclusionary and create an us-versus-them mentality in the office.

TIPS FOR GETTING STARTED:

1 MAKE IT CLEAR. Nolan suggests setting up a very specific list of products and their spiffs. “Our opticians get spiffs on everything from digital lenses and multiple pair sales to polarized lenses and AR,” says Hawley.

“The spiffs range from $2 to $5,” Hawley adds. “For example, they receive $5 for each digital lens sold, another $2 each for polarized lenses and AR coating. There’s no cap on what they can make.”

2 KEEP IT MINIMAL. To minimize competitiveness in the dispensary, Hawley no longer posts employees’ sales numbers, but she does list the current top sales earner.

“People were asking each other on the floor how many sales they’d had that day,” she says. “So, we changed the rules and we came up with an agreement and put it on a poster in the break room and everybody signed it.”

Now, the practice employees’ goals are set based on their previous numbers and assistant managers discuss their sales and rankings for each bi-monthly pay period.

3 KEEP IT LOW-PRESSURE. Since she’s had some issues from high-pressure sales, Hawley works hard to train employees on proper selling techniques.

“If we see a problem, we always try to coach that person and sit in on some of their sales,” she states. “We constantly monitor what’s going on with sales and people on the floor, and if there’s an issue, such as someone staying at the front of the store to get to customers first, then we can work that out with the assistant managers.”

4 SPLIT IT UP. Not sure how to spilt spiffs on sales between two employees? Hawley suggests a pure 50/50 split.

“If one employee helped someone and they came back later and made the sale with another employee, then we do a 50/50 split,” she says. “We haven’t had any problems with this structure.”

THE COMMISSION PROGRAM

WHAT IT IS: Commissions are paid out as a reward to dispensary employees as a percentage (typically one to three percent) of overall sales. Commissions are often paid in addition to spiffs.

PROS: Commissions can be a positive addition to a dispensary as programs can effectively encourage sales-oriented employees to boost the dispensary’s bottom line.

CONS: However, commissions can feel exclusionary and create dissent in the dispensary. Because only dispensary staff is rewarded for sales, this type of program can create a negative atmosphere in the office.

TIPS FOR GETTING STARTED:

1 SET A PERCENTAGE. Determine the right percentage of sales reward for your office; typically, this can range from one to three percent. “Our opticians, receptionists, and techs get three percent of dispensing sales (on anything they ring in besides exams),” says Hawley.

Bringing staff who are not traditionally sales makers into the sales pool means taking the time to teach them the basics.

“We train our receptionists on the benefits of selling up to a one-year supply of contacts,” she says.

For those who are currently in sales, the training reaches beyond the frame boards and into keeping patients from leaving without a filled prescription. “We also do a lot of training with our sales staff on how to turn the sale around if they believe someone is leaving to go make a purchase online,” Hawley says.

2 PAY IT OUT. Nolan suggests that commissions (as well as spiffs) should be paid out every pay period (typically monthly or bi-monthly) as part of the employees’ salary.

That’s not just a good policy, it’s the law. “It’s illegal to pay spiffs or commissions in cash,” he says, “so be sure it’s run through the practice payroll and part of the employees’ taxable income.”

3 PAY IT RIGHT. Nolan also stresses the importance of paying commissions based on gross collected sales, as opposed to gross sales.

“Gross sales is the dollar amount of everything sold, while gross collected is the amount of money that comes in after expenses,” he says.

THE BONUS PROGRAM

WHAT IT IS: Bonuses are rewards for dispensary employees that recognize practice growth over a specifically set period of time.

PROS: Rewards all employees for sales growth in the business.

CONS: Some argue this reward platform is a substitute for good management and hands-on motivation of employees. Others say employees can become deflated when sales goals aren’t met and bonuses aren’t handed out.

TIPS FOR GETTING STARTED:

1 MAKE IT CLEAR. Hayes stresses that this type of program should be easy to understand and made clear to employees.

“Define a clear outcome—with a time frame,” he says. “For example, say you want to grow by 10 percent for the month over the same month last year or, specifically, say you want to produce $100,000 in revenue a month,” he says.

Letting employees know what they might be receiving is important to building buy-in. “Have a very clear outcome for the employee and engage them in that program,” Hayes says.

In addition, Fleming says it’s important to make the structure of the bonus program very clear to new employees who might be accustomed to commissions or spiffs.

2 MAKE IT EVEN. While some businesses do not include the optometrists in their bonus structure, others do.

At Pearle Vision Maple Grove, all full-time employees (including ODs) receive a $250 bonus if the monthly sales growth goals are met; part-time employees receive a $150 bonus. The goal: five percent growth over the same month the previous year. “I make a themed poster each month to post in the break room that shows how much we have to go each day to hit our goal,” says Hawley.

Keeping an eye on the progress of the team toward the goals can bring the whole office together working to hit the desired number.

“Sometimes it comes down to the last day of the month where someone pushed us over edge by making a $300 sale and the whole store is cheering,” Hawley adds.

3 KEEP IT PROFITABLE. Hayes stresses the importance of paying bonuses only on money your business actually has.

“There still has to be a profitability component to the program for the business,” he says. “No matter what you do, make sure that your cost of goods goes no higher than 30 percent.” Adds Nolan, “Sometimes practices are paying out bonuses on money they don’t really have. For this reason, you never want to tie bonuses to gross dollars; they should be paid out on the net income of the practice.” FB