How to Manage Commission Splits

by | Jul 27, 2021

Commission splits add complexity to any commission plan. Many organizations employ them as a way to encourage teamwork among salespeople. In some industries, including insurance and real estate, splits are commonplace — and necessary. For those managing commissions, they confuse and frustrate.

We help organizations of all sizes navigate these commission plan elements. Over the years, we learned what goes into them and picked up some best practices for managing them. That’s why we’re here to share our expertise.

A cake with various types of berries has a slice removed, figuratively referring to how commissions are split among sales team members.

When it comes to commission splits, it can be challenging to ensure that every payee gets a fair slice.

If you struggle to process endless commission splits every cycle, we’ve got some tips for you. But let’s start with the why.

Why Use Commission Splits?

Splits come into play for a number of reasons. If two salespeople tag team a prospect through the pipeline, those individuals share a cut of the commission. In other situations, splits are built into the structure of a sales team. Perhaps sales support staff assist in a sale by prospecting or performing other duties that lead to a sale. The person in that role typically receives a portion of every sale they’re involved in.

In some industries, commission splits are a common standard. For instance, many insurance agents and producers share commissions for the sale of a policy based on certain agreements. One example might be when an agent retires and passes their book of business onto a successor. Generally, the successor agrees to grant a portion of their commissions to the retiring agent for a period of time. Similar commission split arrangements and agreements may also be found among real estate agents.

Every type or style of commission split needs to be taken into account by whoever is managing commissions. This helps to ensure that everyone on payroll earns the commissions they deserve.

Commissions professionals discuss how to split commissions among sales team members

Best Practices for Managing Commission Splits

  • Keep Detailed Records: Get every detail of every split incorporated into a record somewhere. You want to be able to call up that resource whenever you need to check over which commissions need splits and when. The easiest way to do this would be to have an application that can easily provide information from previous cycles.
  • Stay on Top of Adjustments: Whenever changes to commission splits — or really any commission plan changes — come about, update those records. Make notes, set reminders, update calculations where needed. Make sure it’s something that will practically smack you in the face when you return to process the next cycle.
  • Confirm Details with Stakeholders: It’s always good to get an extra set of eyes on commission calculations in general. When it comes to splits, that’s doubly true. Different rules may apply to each and every split you’re calculating. Getting stakeholders, like managers and perhaps even the payees themselves in some cases, to look calculations over can eliminate possible errors.
  • Maintain Lines of Communication with Payees: Open lines of communication with all payees. It’s just a good idea in general. But when dealing with commission splits, it’s important to get feedback as quickly as possible. If a mistake is made on a commission split, you’ll want to correct that sooner rather than later. That’s because a miscalculation can lead to mistakes in payment for more than one individual. Catch it quickly to avoid additional frustration.
  • Implement Core CommissionsOur application simplifies all aspects of a commission plan. That includes commission splits. Core will retain how splits have been determined previously and navigate you through each subsequent split based on that information. You can also easily update calculations and make changes where needed without too much hassle. It’ll help you keep those splits under control and accurate.

Our tools manage all types of commission plan elements, no matter how complex they may be. Contact us for more info or schedule a free demo and we’ll show you what we can do for your organization.

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