Fair Pay: How to Create Compensation Clarity

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Clearing the Fog of Wireless Wages

In the increasingly complex world of telecom retail, one area that has suffered is clarity around compensation for wireless store employees. As devices, rate plans, promotions, accessories, and add-ons continue to expand and evolve, so do the opportunities for store workers to make money. Stores are largely run by highly sophisticated authorized retailers, who are themselves accountable to the carriers they represent. To meet the goals expected by their carriers — and to incentivize their retail workers to sell enough to meet those goals — authorized retailers must use highly complex compensation structures that allow for myriad moving parts.

With this growth in compensation complexity has come the inevitable rise of confusion. How are busy store workers supposed to keep track of all their sales and commission targets to fully understand what they are owed in their paycheck? When are bonuses due, or not due? And what about chargebacks? When a customer returns a device or cancels an activation, is the commission paid to the store rep who sold it recalled?

It’s no wonder that payment errors are made, and many wireless store workers across North America are confused. And confusion can lead to anger and accusations of wage theft, both perceived and real. A recent Communications Workers of America (CWA) survey of store associates at authorized retailer locations found that more than 90% of respondents said they had experienced some form of wage theft by their employer — ranging from not being paid due bonuses or commissions, being denied overtime premiums, incorrect chargebacks, being required to work off the clock, not being paid minimum wage, and more. And telecom retail is far from alone in this. Across all sectors, research by the Economic Policy Institute estimates that 4.5 million working Americans are victims of wage theft every year, and that the amount stolen by employers shaving time off their staff’s timecards, at $22 billion, is double the dollar value of time theft by US employees ($11 billion). 

In the vast majority of cases, good telecom retailers — whether corporate carriers or authorized retailers — aim to be honest and fair in their payments to staff. But with so much confusion around complex compensation structures and what is truly owed, it’s not always perceived that way by the employees.

Here’s where clarity and transparency are key. Complexities cannot always be reduced, but with the right systems and technology in place, the many layers of compensation structures can be broken down, visually demonstrated, and understood by all. When employees have access to those technological tools, not only are wage disputes dramatically reduced, but staff are also much better motivated to sell and earn commissions and bonuses.

What we’ll cover

In this report, we’ll look at the following areas and share expert insights into how to make each area transparent and accessible. 

• Best practices for setting fair wages and commission structures
• Creating transparency on working hours and scheduling
• Demystifying complex commission and bonus structure
• How technology is the key to compensation clarity

Right From the Start

A look at best practices for setting fair wages and commission structures

Because compensation for wireless store employees is so complex, it’s crucial that retail operators set up wages and commission structures effectively from the get-go. 

Like any other employer, telecom retailers are legally obligated to pay their workers at least minimum wage. But beyond that, there are no rules governing how your pay structure should arrive at that minimum wage, or whether and how much you pay in bonuses above minimum wage.

Jonathan Bergman, CEO of HireWellNow — a recruitment company that specializes in retail and works heavily in the wireless sector — observes that when it comes to attracting staff, it’s an employees’ market as there’s a huge shortfall in workers.

“You have to offer a competitive pay package, and clearly show how they will make their money, otherwise you won’t get any applicants,” Bergman told iQmetrix. ​“In some ways, these employees have the ability to literally write their own check. By their own efforts they can dictate how much commission and bonuses and SPIFFs [sales performance incentive funds] they’re going to make. As an employer, you can explain what the base rate is and the commissions and the amounts that they would earn on these different elements that they sell, and they can create their own earnings goals for themselves.”

Bergman said that it’s important to be clear to new store employees about these different elements, as it can get highly confusing. ​“In this industry, we often have such complex pay structures, I’ve had to break out a spreadsheet just to figure out how much these applicants can earn. But I’m seeing a huge shift in trying to make things simpler — and a big part of what has to happen is to be extremely transparent.”

Meeting minimum wage standards

With minimum wages having risen in recent years across many states in North America, telecom retail operators have come up with a host of different systems to address this increased employee cost. Shawn Addington, Vice President of Operations at Shiftlab, says that in his extensive experience in the US wireless retail industry, he’s aware of some authorized retailers who raised the hourly base rates to minimum-wage levels, but reduced the amount sales reps can earn on commission and bonuses.

Others, explains Jonathan Bergman, can use the base rate as a floor and either pay the floor or commissions, whichever is higher. Either way, the structure needs to be clear and understood by sales managers and store associates alike, to ensure there are no disputes.

The thorny issue of chargebacks

Bergman adds that it can be hard for store managers to help associates understand more challenging topics such as chargebacks, which can cause confusion and result in the worker feeling they have been misled or underpaid.

“You have store reps being hired by store manager, who may or may not do a really good job of talking about this whole chargeback concept. It’s a very difficult concept to talk about. And then all of a sudden, as an employee, I’m hit with a chargeback when the customer I sold a five-line deal to four months ago has defaulted on their payments and the carrier has taken it back. The retailer can’t write that off, but I as a young person don’t understand why I just lost $200. My first thought is likely to be that I’m being cheated by my company.”

Training is crucial

An unintended consequence of commission-based earnings can be overselling — which in the telecom retail sector could result in a disproportionately high number of chargebacks for the associate. Bergman explains, ​“Very good salespeople who understand the business will have relatively few chargebacks, because they have understood their customer’s needs and ability to pay and have sold accordingly. If I’m an aggressive salesperson, and I’ve sold you a six-line deal when you’re a two-person household, you’re more likely to deactivate several lines when you don’t use them, and then I’m hit with the chargebacks.”

This means that excellent sales training is a crucial element of employees understanding not only how much they could earn on commission, but also how to avoid overselling and that selling more doesn’t always pay off if it’s not what the customer needs or wants. Training can also help sales reps not to overpromise because of incorrect assumptions, such as saying that the network has coverage where it doesn’t, which could also result in deactivations and chargebacks.

Ultimately, communication, training, clarity, and understanding are the foundations on which to set up workers with their compensation structures. Bergman adds, ​“In the vast majority of cases, I don’t think there’s any malice or intention to underpay workers. Retailer operators just have to use systems and tools to create the full transparency that’s needed from the start, so that expectations meet reality.”

Timing is Everything

Creating transparency on working hours and scheduling

Even an area that should be simple, like number of hours worked and the base hourly pay that is due, can be complex in the world of retail. Store associates might be scheduled to cover a shift, but give it to a colleague. They might work overtime, or through their break in order to leave early. They might turn up late and ask their colleague to punch them in on time — otherwise known as ​“buddy punching.” These and many other permutations of shift work can create confusion and mistrust between employee and employer, especially when it comes to pay.

This is where using a system that’s visible for all parties is essential, so there can be no disputes over what is truly owed in compensation. 

Shawn Addington of Shiftlab says, ​“It’s important to bring all that information together in one view, where the employer is seeing all their shifts and the hours they worked, and what their hourly rates is they’re getting paid, and having that daily view that keeps them up to date. So, at the end of the pay period, there’s no moment of ​‘what happened to my pay? I thought I’d worked this many hours last week, but I’m only being paid for this many.’ Having a system where employees get a daily look at where they’re at, not just for hourly wages but also all their commissions and bonuses, makes staff feel at ease and understand why they’re being paid that amount.”

This is where using technology that offers advanced time-clock functionalities, biometric punch-ins, and other sophisticated work tracking systems is extremely important. That way, employees can see exactly when they worked (and when they’re scheduled to work), when they actually punched in and out, when they took a break, and so on. 

‘Mistakes’ often favor the retailer

However, some companies don’t see giving employees that level of earnings transparency as being to their benefit.

Addington explains, ​“This is where it can get tricky. It can be a difficult push to convince retail operators of the need for that transparency. From their point of view, it’s often easier to limit the employees’ access to this kind of information. Some companies might even have the policy, which is not the right practice, of keeping this information limited and allowing the employees who notice something is off, to notice it and say something to rectify it — and allowing the ones who don’t notice it, to not notice. This is not the right thing to do ethically speaking, but as a company, this is oftentimes the easiest route.”

It may be the easiest route, but this is where mistrust from employees takes root and can grow. One of the CWA survey respondents, who works at an authorized retailer-run store in Alabama, said his employer used a performance tracking tool with chronic ​“system issues” that always calculated staff compensation discrepancies in favor of the store owner. Such a practice might result in higher profits for the retailer, but is highly unethical and creates an extremely negative culture that is ripe for pay disputes and staff resignations.

Addington said, ​“If you’re a company that wants to use best practices, and truly has the best intentions of paying everybody what they are absolutely owed, there should be no issue in using systems and technology that create transparency for everybody, and allow employees full access to that information.”

Shift scheduling that works for everybody

Many of the CTA survey respondents also complained about unstable and inflexible shift scheduling. Nearly 80% of respondents said their hours or work days changed unpredictably from one week to the next, making it impossible to make other regular plans, and nearly two-thirds said they were frequently unable to take breaks during their shifts.

Once more, here’s where it becomes essential to use an intelligent workforce scheduling platform that creates immediate transparency for all store workers — and ideally, enhances the employee experience and improves engagement by giving workers the visibility and control they need. Added to that, giving store managers who are responsible for scheduling a tool that helps them in this task will ultimately reduce scheduling errors and disputes over shifts.

A Slice of the Pie

Demystifying complex commission and bonus structures

As mentioned earlier in this report, commission and bonus structures in wireless retail can be wildly complex, which can lead to considerable confusion. It’s almost never a simple matter of earing an hourly wage plus a simple percentage of sales in commission on top of that. For example: commission percentages vary based on targets hit at different tiered levels, bonuses can kick in depending on certain performance metrics, and SPIFFs can be paid out based on sales incentives coming down from the carrier. 

All of these complexities create a series of constantly moving goalposts that make it extremely hard for wireless store employees to understand what they should be paid in any given pay period, which creates a fertile breeding ground for mistrust and pay disputes.

A combination of transparency, clear communication, and frequent updates that are visible to all employees is the best approach to this problem, says Dan Phee, COO of TEAM Wireless, one of the Verizon major authorized retailers. 

“Our staff are paid commission as a percentage of gross profit on every item they sell,” Phee explains. ​“On each product, we determine how much we will make, and what percentage of that will be shared with frontline staff, and we will make that consistent. We ensure that full transparency is there. If something changes in terms of the price to the customer, or our cost lowers, or Verizon pays us more to sell it, that is passed on to the employee. If the carrier is really pushing a new product and paying us more, that gives us a higher gross profit and a higher commission for the team members, and it really motivates them to sell that product. It effectively makes our employees like part owners in the company — they share in our profits. We like our employees to see what’s most profitable and sell those products, because it helps them earn more and it helps us make more profit as a company.”

Implementing tools for transparency

Whichever kind of commission structure you choose to put in place, what’s important is that it is easy for workers to follow along with what they’ve earned throughout the month and what sales and commission earnings they are aiming to achieve.

Shiftlab’s Shawn Addington suggests that simple is better. ​“So many companies do two things: one, they change how they pay people so often that it confuses them. And two, they complicate it so much that workers feel like they’re being cheated of wages. And the truth is they just don’t understand how they’re being paid.”

Addington, who joined Shiftlab after many years of working directly in wireless retail, added, ​“I see retailers that have seven different things that affect your commissions and by the end of it you think, hey, I sold this much, I should make this much, but they have all these rules in there that say, but if you do this then you lose a percentage. And if you don’t hit your protection sales target, then you lose a percentage. And in another situation, you lose it all. Plus, those rules are constantly moving the goalposts, by changing from month to month. That’s where it’s so confusing.”

For most operations, however, the business inevitably requires some complexities in compensation structures. To solve for this, Jonathan Bergman of HireWellNow recommends using effective tools and technologies that allow employees to clearly see what they are making — both hourly and in commission, how many sales they’ve made and how close they are to a bonus or SPIFF. Workers also need equal transparency on how chargebacks work, so that they don’t spend their unsecured commission before the chargeback period is up.

Behind the Curtain

How technology is the key to compensation clarity

All of the above factors point to the same conclusion — that having transparency and giving employees unfettered access to information about all levels of compensation is the best way to run a wireless retail business. But what are the best ways to go about giving that clarity?

Today’s leading retail management and workforce scheduling solutions offer these tools, and far more besides. 

The employee management module of iQmetrix’s retail management system RQ, for example, offers highly customizable commission and bonus reporting, biometric punch clock, security role setup options, real-time payroll insight for managers, among many additional features. RQ makes it easy to set the right security level so that staff can see their own information without having access to anybody else’s. Store managers and operations staff can set up multiple commission groups and bonus structures based on their own business’ strategy. And workers can use RQ’s customizable widgets to track their own commissions, KPIs, sales goals, and other custom elements, as well as running full commission reports to see behind the curtain in terms of how the math adds up.

Integrated into that, it’s crucial to have an intelligent workforce management tool that feeds off data coming from the retail management tool, and vice versa. Shiftlab, for example, is a holistic scheduling platform that creates transparency over shifts, hours worked, and breaks taken, and gives the employee greater control over their work experience. Shiftlab also provides the added bonus of keeping employers compliant with state labor laws, ensuring that pertinent regulations are adhered to.

No one-size-fits-all solution

Phee of TEAM Wireless explains that, since his stores run on RQ, most employees go directly to the commission reporting tools to show them exactly how much commission they will make on that sale. ​“Our team members have access to all that information. They’re very interactive with RQ on a daily basis as a tool to give them that transparency on commissions. And then we send daily reports out to all team members using BI [Business Intelligence] out of RQ. And we also use Shiftlab, which plugs into RQ, to help with our scheduling.”

He adds that, as TEAM Wireless has a commission system based on gross profits on each product — which is not the same for every wireless retailer, as some use different structures — it was easy to set up this custom commission structure in RQ and roll out across the entire workforce.

What’s more, once it was in place, it needed to be adaptable based on those moving goalposts mentioned earlier. Phee explains, ​“RQ made a pretty simple, once we figured it out, to be able to change on the fly with Verizon, as they change their compensation when they offer SPIFFs to us to change sales behaviors. That made it easy for us to do that for our entire salesforce in a quick manner.”

Ultimately, the goal is to ensure that not only will store employees get paid what they should be paid, but also that they can trust their employer to do so. This fosters an engaged workforce, creates a culture of honesty and authenticity, and reduces staff turnover. And, given the state of the employment market today, no retail operator can afford anything else.