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What’s a Fair Salary Plus Commission Rate and More of Your Questions for April

Bosses and workers often have different ideas on what’s equitable. Here’s how to make everyone happy.

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I have an employee who makes $16 an hour and 6 percent on retail (although for loose diamonds, commission is based on gross profit). She earns close to $60,000 a year but feels underpaid and that paying gross profit on diamonds is contrary to the industry standard. How can I convince her she has it pretty good?

She does indeed have it pretty good, says industry consultant Andrea Hill, owner of Hill Management Group, noting that her hourly rate is almost 50 percent higher than the average for retail salespeople of $11.50, and even more than the average of $15 paid by very high-end luxury retailers (think Gucci). The commission is also higher than the industry average of 3-4 percent on retail, although, significantly, Hill notes, “wise” businesses are increasingly moving away from such a formula to pay commission on gross margins. “In this way, sales professionals are challenged to balance the need to get the highest price possible with the need to close the sale. When commissions are paid out on total sales only, then it becomes very easy for the salesperson to sacrifice profits for the easy close,” she says. While exposure to such numbers should mollify your associate, what you really want to do is excite her about the potential of earning as much as $100,000 a year — which is what top luxury salespeople make — although that requires building a “strong book” of customers through active networking, clienteling and prospecting work. Keep in mind, however, that even the most generous commission rate won’t help if you’re not on top of your game, meaning advertising intelligently, keeping up with changing retail trends, providing the right technology for how consumers today want to shop, and maintaining an exciting inventory that reflects current tastes, says Hill. “If the retail business owner does not ensure that they are running a strong merchandising and marketing operation, then even the best salesperson in the world will not be able to turn the promise of commission into actual earnings.”

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I still can’t get my head around color temperatures. Can you help?

It probably helps to think of the original theoretical model that underlies the index — that of a black metal radiator, whose color changes as it is heated, from black to orange to red to blue to white hot. Similar to Celsius and Fahrenheit, the Kelvin scale marks different degrees of thermodynamic temperature, but it is the association with color change that makes it useful as a way to designate light bulbs. Where it gets confusing is how at the lower end of the scale, from 2000K to 3000K, the light produced is called “warm white” and ranges from orange to yellow-white in appearance. Meanwhile, color temperatures further up the scale, between 3100K and 4500K, are referred to as “cool white,” but the bulbs are emitting a brighter, hotter light.

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We’re planning on holding a thank-you dinner for our best customers to celebrate our store’s 50th anniversary. How do we avoid offending people, especially those small ones who have been loyal if infrequent customers for many years?

This is a tough one. We’d suggest you start with the number of people you’re able to host and then divide that figure up among your sales staff. They should know who their most deserving and valuable customers are. Refrain from advertising the event to all your customers so as not to offend those who aren’t invited. You may also want to prepare a back-up list so you can add names in place of those who can’t make it — there will no doubt be many — to cover as many people in your customer base as possible.

What’s a good way to sell our company to prospective employees — particularly top salespeople?

Just about the most valuable skill a businessperson can have is the ability to recruit and retain good people and yes, it all starts with that job posting. “When the right people read your ad, their hearts will whisper, ‘These people are like me, and I am like them,’” says Roy H. Williams, author of the business bestseller The Wizard of Ads. Bullet point what the job entails, what kind of inventory they will be handling, and also the benefits, but the core message should be about who you are as a company, your reputation and your goals. The best salespeople often have don’t have a sales background, so go easy on the requirements. Your message should be more about culture than qualifications.

Over the years, INSTORE has won 80 international journalism awards for its publication and website. Contact INSTORE's editors at editor@instoremag.com.

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Deb Schulman says once she and her husband, Ron, decided to retire, she could feel “the stress start to leave.” The owners of B. Alsohns Jewelers in Palm Desert, California, the Schulmans had heard about Wilkerson over the years and contacted them when the time was right. Wilkerson provided the personalized service, experience and manpower it took to organize their GOB sale. “We are so impressed with the way Wilkerson performed for us,” says Ron Schulman, “I’d send high accolades to anyone who was interested.”

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How To Decide Between Equal Job Candidates, Splitting Staff Chores and More of Your Questions Answered

Plus how to market your engraving capabilities.

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I have two good candidates for the position of sales associate, but I can’t decide between them. Can you suggest a tie-breaker?

Toss a coin and let fate be your arbiter. If they’re both equally appealing candidates and you can’t reduce the uncertainty by doing further research or interviews or trial runs, then your decision doesn’t much matter. That likely sounds like rash advice, but this paralysis you’re experiencing has a name: Fredkin’s Paradox. The computer scientist Edward Fredkin summed it up as, “The more equally attractive two alternatives seem, the harder it can be to choose between them — no matter that, to the same degree, the choice can only matter less.” To be sure, it will probably turn out to have mattered in hindsight, but by then it’ll be too late. Given that you’re unable to know how things will turn out, overthinking this one — or any similar tough choice — is futile.

How do you share the chores among sales staff fairly and in a way that is easy to enforce?

Store consultant David Geller suggests breaking your staff into groups and rotating the responsibilities. “Put some easy chores with some bad ones like vacuuming and cleaning the bathroom,” he recommends. The people whose names are under the different groups of chores (see table) do them for only one week, and then they move onto the next group of tasks. This shares around the bad and light chores and also makes it easy for the store owner to raise the issue when a job needs doing. “After doing this, I no longer complained to a person; I complained to a group,” Geller says. “If I go out and see the glass in a showcase is dirty, I don’t expect everyone to clean it, just Group 2.’”

I recently purchased an engraving machine. Any ideas on how I can market it?

One of the biggest mistakes jewelers make is keeping their engraving machine in the back room, says Annette Peloquin, marketing manager of Signature Engraving. Putting the engraving machine in the front of your store, even if it’s just for special events like Mother’s Day and Christmas sales, has a “curiosity” factor that will attract new clients into your store. Also, regular direct-mail pieces with coupons or discounts on engraving services are another way to promote your services. “Be sure to aggressively promote the wide range of engraving possibilities,” such as logos and photos engraved on charms, she says. Hand out flyers to bridal shops and bridal planners that may wish to engrave picture frames or champagne glass or guest book foiling. Also, says Peloquin, engraving corporate gift items for small-to-medium-sized businesses can be another lucrative sideline.

I found a honey of a deal at an estate sale, but I’m worried about paying so little for a piece worth far more. Are there any state or federal laws regarding the purchase of jewelry that is marked at a grossly understated value?

While laws vary widely between different states and municipalities, Elly Rosen of the AINetWork’s Gems & Jewelry Trade Reference says, “We may seek guidance from the general principles involved.” For Rosen, the simplest answer is that “we can buy as low as we wish and make as much profit as we can … so long as we do nothing to deceive or take advantage of the seller.” Estate sale buying is the easiest to answer as it’s a free and open public sale with the seller in control. In such a situation, Rosen says, “We can offer as low as we wish and it’s their option to accept. If it’s an auction and our low bid gets the hammer — it’s ours to resell at whatever profit we can fairly obtain. If we’re on the street and someone offers to sell an item far below its value, we can accept their offer. We don’t know each other, so there’s nothing leading them to believe we have special knowledge they might otherwise rely on.” However, when buying over the counter in your store, things change. “[Customers] may believe they can rely on our knowledge, so greater care is needed not to say or do anything implying low value. They ask for $50 for a $1,000 item, we can accept their offer.”

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Your Holiday Questions Answered, Including Security, Aged Inventory and Sales Presentation

Plus a tip for making shoppers feel comfortable in your ‘decompression zone.’

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What should I do to reinforce security measures at this time of year?

Here’s some advice from Jewelers UnBLOCKed:

  • Create obstacles. Use display cases and holiday décor to block thieves from running straight in and/or out of your store. All areas that contain valuable merchandise should be visible to both customers and staff. Avoid any blind spots.
  • Stay under the radar. If you’re planning a vacation, don’t advertise your absence; refrain from posting vacation pictures until after you return. Posting while traveling makes your store, employees and even your home susceptible to invasions, crimes and thefts.
  • Double and triple check seasonal employees. Even if they’re temporary, you need to ensure that all employees are trustworthy. Don’t forget to perform background and reference checks.
  • Limit the number of pieces that can be presented to a customer to between one and three pieces of jewelry or watches at a time, and post signage of this policy. If a customer complains, sales associates can point to the sign and mention its store policy. Deter potential thieves from trying to take off with a stockpile of jewels.
  • Keep store windows clear. A cluttered window blocks criminal activity from being seen outside.

We’re expecting to see a lot of old faces over the next few weeks. What should we do about aging inventory our customers may have seen before?

Stop fretting. Start polishing. “The majority of your customers don’t remember your stock,” says Dick Abbott, owner of the Edge POS software. “They may recognize a specific piece they have looked at previously, but the majority of it will look new to them, as long as it looks new.” Make sure each item is clean and sparkling and has a fresh ticket on it to adjust the retail to reflect today’s prices. Add a different chain to a pendant. Rearranging your cases makes everything “new” in the eyes of your customers. Identify the items you wish to clear and give your sales team a sense of ownership by brainstorming ways to clear old stock and then review your results and strategies every day.

What last-minute things can I do to sharpen my sales presentations?

Sales and display consultant Larry Johnson recommends enriching your vocabulary. There are adjectives that carry more emotion than the usual ones salespeople tend to use, he says, suggesting words like stunning, glowing, bold, brilliant, glistening, radiant, elegant, natural, fabulous, attention-grabbing, sparkle, romance, edgy, and timeless. “Upgrade your sales presentation to include these descriptive words that add impact. Start out today using one or two until you are more comfortable with adding more.”

How can I get shoppers thinking about buying as soon as they cross the threshold?

Pay attention to your store’s decompression zone, according to VEND, the global cloud-based POS and retail management provider. The decompression zone is the first few feet of your shop. Shoppers who are in this part of your store are prone to distractions, which is why most experts agree that retailers should keep the decompression zone simple and uncluttered. In addition, having greeters in your store makes people more aware of their surroundings and helps them focus.

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How to Be Safe at Company Parties, the Best Interview Question for a Prospective Hire, and More of Your Questions Answered

Plus how to avoid becoming a mediocre business.

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How do I lift my store out of the rut of mediocrity?

According to work by the Brigham Young business school on high-performing teams, peers manage the bulk of the heavy lifting when it comes to maintaining standards. But how to get to that almost mythical land of self-enforced high standards?

Joseph Grenny, a social scientist and author of Crucial Accountability, says there are four leadership practices that can help:

1. Start by showing the consequences of mediocrity to connect people with the experiences, feelings and impact of bad performance. Keep the issue alive by telling stories that illustrate work well done and the real human cost of shoddy work, such as lost diamonds, ruined weddings and upset customers.

2. Set clear goals and explain why they are important. “Use concrete measures to make poor performance painfully apparent,” says Grenny.

3. Establish peer accountability so that people feel comfortable challenging one another when they see mediocrity. Regular weekly reviews can provide opportunities for mutual feedback and establish peer-accountability as a norm, Grenny says. It’s key that your store becomes an environment where everyone feels entitled to challenge anyone if it is in the best interest of the business.

4. Be quick to defend the high standards. A chronic poor performer is a clear impediment to the goals you’ve set. How you handle this situation will let your team know whether your highest value is keeping the peace or pursuing performance.

“When you ask a group to step up to high performance, you are inviting them to a place of stress — one where they must stretch, where failure is possible, where interpersonal conflicts must be addressed,” says Grenny. “If you shrink from or delay in addressing this issue, you don’t just lose that person’s contribution — you send a message to everyone else about your values.”

I’m planning my company party, but one concern is that somebody might get drunk and have a car accident. Got any advice on protecting myself?

Concerns about liability for alcohol-related incidents, sexual harassment, and workers’ compensation claims have led many companies to forgo holiday galas entirely. You don’t have to. But if you’re really afraid, lawyer Anil Khosla, writing in Inc. Magazine, suggests the following steps to reduce your liability: “1. To distance the business from the party, make it an entirely social event, don’t invite clients or vendors, and make sure employees know that attendance is voluntary. 2. Plan accordingly. Hold your gathering off-site, if possible. That may shift some of the potential liability to the hotel, restaurant, or caterer. If you must have an on-site party, hire an independent caterer. Don’t permit anyone from the company to serve alcohol, and instruct bartenders to stop serving anyone who seems inebriated. Lawyers advise avoiding an open bar— or, at the very least, limiting it to the first hour. Also, close the bar at least one hour before the party ends. 3. Consider providing transportation to and from the event. Make sure that cabs will be available, and appoint someone to suggest cab rides home for people who have had a few too many.”

How do I tease out a prospective hire’s innate strengths during the interview process?

The indirect method is often best when it comes to getting at a prospect’s true strengths. Marcus Buckingham, a leader of the strengths-based school of business management, suggests asking this question: What was the best day at work you’ve had in the past three months? “Find out what the person was doing and why he or she enjoyed it so much,” he says, adding it’s key to keep in mind that a strength is not merely something someone is good at. “It might be something they aren’t good at yet. It might be just a predilection, something they find so intrinsically satisfying that they look forward to doing it again and again and getting better at it over time.” The theory is that the best businesses are those that fully leverage the strengths of their employees as opposed to trying to fix up their weaknesses.

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