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Conn's Testing New Pay Plan For Sales Staff

10/12/2009 02:00:00 AM Eastern

Conn's, the regional CE and appliance chain, may move from a 100 percent commissioned pay structure to an hourly rate plan with lower commissions but increased incentives and added bonuses for sales associates.

The new performance-based plan is designed to provide greater compensation for top performers, improve the productivity of average associates, and weed-out underperforming workers.

“Our best performers will earn significantly more,” said Bob Lee, store operations senior VP for the 75-store chain, which has locations in Texas, Louisiana and Oklahoma.

The new compensation plan was set to go into effect Oct. 4 but is undergoing further testing in Conn's five-store Austin, Texas, market, according to Lee and a Securities and Exchange Commission filing.

Under the new structure, associates would work on a sliding hourly scale — ranging from minimum wage to $20 per hour — based on their monthly sales volume.

The pay rate would be adjusted higher each month to reflect improved performance, and lowered only every other month to provide a grace period for an “off” sales cycle.

Commissions would be static for products and for service attachments, but volume incentives would be increased 80 percent, up to $2,000, Lee said.

Sales staffers would also see a significant increase in the company's use of spiffs — a previously underutilized means of driving store margin, he noted — and top performers could earn additional compensation by participating in a new mentor program. The latter would reward sales “mentors” based on the increased productivity of new associates they take under wing. This would further incentivize senior staffers while providing enhanced training for recent hires, Lee explained.

Associates could also earn extra income through a store volume bonus pool, which would reward all staffers on a prorated basis when their store meets its sales quota.

All told, the new pay structure will “enhance our ability to serve our customers, retain quality sales associates and encourage above-average performance,” Lee told TWICE.

Conn's plans to make the changeover far enough in advance of the peak holiday selling season to ensure a smooth transition, and both associates and the company should begin to see tangible benefits, including reduced payroll costs, by November.

The plan tested well in an Austin pilot last month, and for the most part was well-received by sales associates company-wide. “We have not seen any mass exit,” Lee observed. “The very top performers support it, we've heard some negatives from the lower-performing category, and others want to see how it works out.”

Lee added that any comparisons to Circuit City's controversial switch to a non-commissioned sales force are unfounded. “As our San Antonio district manager, a former Circuit City associate, pointed out, their plan punished top performers. We're taking the opposite approach.”

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