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May 03, 2009 at 08:00 PM
Getting started selling life insurance is now and always has been a tough row to hoe. One of the most difficult hurdles is the compensation system. With the exception of a sometimes small sum for training allowance, all income is ultimately derived from straight commissions. Getting such commissions up to a survivable level when starting with nothing can be a real challenge, emotionally, as well as economically.
In my own case I felt fortunate when I entered the business because I had been working as a salesman on straight commission for 11 years. I was at least emotionally adjusted to the system and I liked it because it was a direct recognition award arrangement. If you produced you were paid; if you did not you were not compensated. Simple and fair.
But even the best of commission or incentive plans can be upset when tinkered with by adverse parties–a sad lesson I learned prior to entering the life insurance business. Not everyone rejoices when you achieve success. This was brought home to me rather clearly by a former employer. At the conclusion of a particularly successful month of sales I was anxiously awaiting my commission check and the plaudits that were sure to accompany it. The check was delivered to me in person by the boss, but to my great surprise, instead of a pat on the back, he simply said, “That’s a lot of money–we’re going to have to revise your compensation plan,” and it was not said graciously.
When I recovered from the initial shock produced by this turn of events, my emotion changed from hurt to anger. Thus aroused, I went to talk to the boss about his view of my recent success. First, I reminded him that two salesmen working under the same compensation plan had preceded me in the territory and both had quit because they could not make a living. Then I pointed out that my commission was based upon 20% of the profit. Pushing on, I asked if it were not true that since the company got the remaining 80%, then the more I made the more the company made.
The boss relaxed and admitted that the amount of commission had overwhelmed him and had gotten in the way of his better judgment. He apologized and our good relationship was restored. However, in succeeding years, on two occasions when I brought in very large orders, the same instincts surfaced with vague hints about splitting the territory. It became evident that my boss simply could not adjust to large rewards for large success even through his own net profit rose proportionally.
