What do KBB retailers pay their staff?
For an independent KBB retailer, working out what to pay staff can often appear like a black art. Toby Griffin looks at the variety of structures in use across the industry – what works and what doesn’t?
Is there a more closely guarded secret or difficult-to-manage area of your business than staff pay structures? Large businesses often have basic, supervisory and middle management roles that are visible and can be negotiated accordingly. Medium and smaller businesses on the other hand enjoy the flexibility to offer and reward team members based on individual skills and performance.
But, in general, remuneration in the KBB industry is highly varied and often hard to measure and compare. According to Tony Robson, MD of London-based KBB specialists Day True, “pay and rewards is my biggest conundrum.”
To break it into bite-sized pieces, let’s first consider the often complicated matter of sales-designers remuneration; then other roles including admin and support, and installers; then the theory behind connecting pay and performance.
So, let’s get started first with the front end of the business, the area that provides the money-in, through their sales-skills, design flair, and specification knowledge – the sales-design team.
More than any other area of a KBB business, the remuneration of sales and design teams across the sector and the country is highly varied. I know of a national kitchen retailer that pays its sales/design staff not much more than minimum wage with no commission or bonus. I also know of high-end independents who can pay top sales-designers sums approaching six-figures in a given year.
There is no doubt that experience, skill level and performance should be rewarded, but how this is done is the key.
The biggest and most talked-about variable is commission. Paid as a direct link to sales performance, commission can have a huge effect on the remuneration of a sales role. Having run KBB businesses that have sales roles that are salary-only with no commission; salary and some commission; and 100% commission; I was intrigued to see what the norm was across the industry today. I therefore issued a poll on Linkedin, asking “How does your company pay the sales team?”, and the results of the voting are in the chart above.
So according to the poll, more than four-fifths of sales roles offer a salary and commission; with only a small number offering a higher salary but no commission, and only a tiny number offering commission-only deals. There are lots of opinions as to why this is the case.
Award-winning designer Rini Vanchhawng says “I’ve worked with all three, and I find that salary with commission works best, as salary gives you security while the commission is what pushes you to work harder to earn as much as you can.”
Giving an example from my own experience, for two years I was sales director of Cavendish Kitchens and Bedrooms, in which our eight-strong sales and design team were all self-employed and 100% commission-based, and the business ran very smoothly with a great local reputation for service and quality. It seems though that this is very much the exception these days.
Elizabeth Pantling-Jones, managing director at Lima Kitchens in Milton Keynes, says: “We tried commission-only in the past, but it didn’t work as – due to the time from first contact to order – they weren’t able to build their pipeline for months, and therefore got no commission during this time. Also, it didn’t motivate the right behaviours.”
This sentiment is echoed by Tony Murphy bathroom sales manager at Tilestyle in Dublin: “People can go rogue if only commission-based.”
Lima Kitchens’ Pantling-Jones goes on to explain her company’s previous approaches: “Paying higher salaries with lower commissions to drive design and detail also has not worked, as there has been less urgency to ‘close’ and we have found this unsustainable. We have therefore settled on a basic wage with good commissions that is pooled between designers to drive teamwork, support, drive and a responsibility to not negatively affect other team members. Notably they must meet a minimum target for any payment to be made.”
Garry Milligan, CEO of the Federation of Kitchen and Bathroom Designers, has a similar viewpoint: “I think a decent salary and some commission/bonus is best. In the basic salary/high commission scenario, there is more scope for rushed appointments, lack of good advice and poor aftercare.”
The thinking behind the commission structure at Bathroom and Kitchen Planet in Stirling was swayed by previous experience, as showroom manager Scott Richards explains: “When I previously worked in kitchen sales at a national home improvement retailer, the salary was near minimum wage but with high commissions. This created an air of desperation, which resulted in tactics such as holding back sales to fall into the next month and stealing sales from colleagues when on holiday.”
So, with most sales-designer roles offering commission to a greater or lesser extent, the next question is, how is this calculated? Speaking further with Richards, he explains the approach they take: “Commission is calculated on the total sale amount (less VAT)”, and when asked about maintaining margins he says, “there are no minimum margins but discounting must be approved by management.”
- Read more about salaries and how they can affect your margins in the extended feature in kbbreview – found on page 45 in September’s kbbreview.