Each Amazon team will formulate a corresponding commission system and KPI assessment system based on its own specific situation. Many new employees will be informed of the corresponding situation as soon as they join the company, and then everyone will work towards a common goal. There will be no problem in the short term, but as time goes by, the problem will gradually emerge.
In order to help readers better understand this issue, let’s take an example: the company has formulated an assessment and incentive system that is more in line with the company’s actual situation at the beginning. In the early days, the whole team worked very hard, and it was common to work overtime until late at night, so the team also achieved good results. But over time, a serious problem emerged. Any operating employee who has worked in the company for more than two years will have several popular products in his hands. He can get at least five-digit commissions every month by relying on popular products, especially during the peak season. The commission is more. Sometimes there are even some extreme situations. Some operating employees are more satisfied with the status quo and don’t care about creating new products. They just guard their own one-third of an acre of land, and the year-end bonus commission is much more than those new operating employees who didn’t sleep well during the peak season. Many new operation staff do not say it, but they are not convinced in their hearts. Strictly speaking, this is very unreasonable and not conducive to the development and expansion of the team.
So how did this situation come about? Simply put, there are three reasons.
Reason 1: Amazon is becoming more and more difficult to do now. The success rate of creating new products has dropped rapidly in the past two years. Old operation staff have several hot products in their hands with the bonuses of earlier years, but it may be much more difficult for new operation staff to create hot products with the same sales in the past two years, and they need to put in more effort and hard work.
Reason 2: Many Amazon teams that do boutique models have a small number of people and flat management, and are rarely willing to try the “Amoeba” model. Therefore, except for those well-known large companies, it is basically difficult for old operation staff of small and medium-sized companies to have a promotion channel. In addition, high sales performance does not mean that the team leader has management ability and can lead a good team.
Reason 3: People are lazy. Now it will cost a lot of promotion and operation expenses to create a new product, and the success rate is not high. Old operation staff are not willing to do this thankless task. Moreover, the old operation staff who are particularly willing to fight either become company partners or start their own businesses, and those who stay are relatively conservative.
This situation will not be conducive to the overall development of the company in the long run, because the old operation staff are relatively more experienced, and the company has cultivated them for a long time and devoted a lot of effort. Such people are more suitable for promoting new products and fighting hard battles. If the old operation staff are not serious about promoting new products, then the new products will be mainly created by new operation staff, which will inevitably greatly affect the company’s overall performance growth.
In simple terms, it is to divide the commission of all operation staff into two parts: “stock commission” and “incremental commission”. For hot-selling products that can be profitable for a long time, the past year can be regarded as the stock, that is, when the product is launched one year later, the commission points will be reduced, which is the so-called stock commission; for new products, once the hot-selling products are successfully created and can achieve normal profits, we can set a higher commission, which is the so-called incremental commission. The purpose of doing this is to constantly stimulate old operation employees to create new products and contribute to the company’s sales. This is also good for old operation employees, and can constantly motivate them to learn new things and improve their own operation capabilities.
Will there be problems with such adjustments? Of course there will be. The most likely problem is the departure of old operation employees. Many old operation employees leave because they can’t stand this kind of adjustment. I think this is not necessarily a bad thing. If this operation employee is valuable, the company really can’t operate without him. This type of operation employee must be treated specially. For this type of operation employee, it is recommended that the boss can be more generous and give him shares to make him a partner, or learn the “Amoeba” model to invest and let him start a business. However, some old operation employees can’t stand this new commission method, and giving up their positions to newcomers is of great benefit to the team.