Northamber opens up on commission structure rejig

Distie reflects on staff reward changes and a year in which a number of staff left and joined

Distributor Northamber has opened up on its commission structure reshuffle, which, according to director of strategy Alex Phillips, has "contributed a large part" to its return to growth.

Along with the commission changes, Phillips has also reflected on a year in which Northamber has taken on a "fairly significant" number of new people, and seen a number of staff leave.

Speaking to CRN, Phillips said the commission changes came in last summer and saw Northamber scrap its previous flat-entry gate – a uniform profit target that all sales staff needed to surpass to qualify for commission payments – to give bespoke targets to different salespeople, depending on their experience.

"What happened was there was a flat-entry gate for commission – a consistent commission entry gate for all people on the sales floor of profit required, which was more challenging for people who were newer to the business and it didn't drive the aggressive behaviour, in terms of developing new business that we needed from incumbent sales staff," he said.

"What we have done now is every new person would have, say, a [target of] £1, whereas someone who is established would have £10 and someone in the Premier [category] would have £20, so it's more reflective of the accounts they have. It's fairer, but it also means when we bring in new people we can grow their target with them, rather than them coming in and seeing this big target, so it allows us to invest in the future."

Phillips said the other major change was that Northamber increased its accelerator payout for salespeople who reach and then exceed the highest level of profit targets. The rewards for doing so are now a quarter higher than they were previously – meaning if a salesperson made £100 before, the accelerator payment would now be £125.

He also said that Northamber is fairly uncommon in that its commission is uncapped.

According to Phillips, these commission changes have played a "large part" to Northamber's return to growth, with the distributor announcing earlier this month that its revenues were at £35.7m for the six months ending 31 December, an increase of 18 per cent year on year.

Increasing headcount
As well as helping augment its growth, the commission structure changes have also seen an influx in new personnel coming through Northamber's doors, according to Phillips.

"I think the fact there are such high rewards means we have a lot more people contacting us – so we get constant enquiries on LinkedIn and to our email address – we are getting approached a lot whereas historically we would have looked more to use headhunters. We still use headhunters when we have specific needs, but we have found we can fill a lot of our needs based on people applying to us directly. We took on a fairly significant number of people last year."

But as well as taking on new staff, Northamber has seen a number of people leave, although Phillips said these departures were not a result of the commission structure changes.

"We have a high standard we require from our staff – we are a family business, not in terms of ownership but in terms of approach to work. We have staff who have been here for over 28 years and multiple staff who have been here well over a decade.

"For people who work hard and want a lifetime career, we are pretty unique in distribution, but there has to be an element of wanting to drive the business forward together and there is always going to be some natural attrition. I don't think the [departures] are linked to the commission structure in general."

He said not a "significant number of people" left in 2014, and Northamber's headcount was up over the course of the year.

Greed is great
Phillips also said the commission restructure and recruitment policy reflects a broader cultural strategy at Northamber.

"We tend to shy away from just getting people solely based on pound notes because it means you get people who may not have the best interests of the business at heart," he said.

"Greed is great and it is healthy in salespeople, but you have to have the right balance. With our commission package, people know that it's industry-leading in terms of payouts, but you have to have the right fit with culture, and that is really important to us. It [the commission package] helps with recruitment but it is also part of a broader overarching cultural element that rewards people who are working hard with us, and rewarding people who help the business grow."