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A commission scheme should encourage the behaviour the agency needs, reward genuine contribution and be simple enough for an employee to calculate without asking the accounts team.
Headline OTE attracts attention, but experienced candidates usually want to know how the number is reached. Unclear thresholds, complicated exclusions or unrealistic assumptions can undermine trust before somebody joins.
Start with the commercial objective
Decide whether the scheme is primarily intended to increase personal billing, improve branch performance, protect fees, generate instructions or encourage collaboration. Trying to reward every possible activity often creates a scheme nobody can explain.
Sales and lettings teams may need a mix of individual and shared incentives. Property-management roles generally benefit from a stronger basic salary, with any bonus linked to controllable service, retention or portfolio outcomes rather than sales-style billing alone.
The main building blocks
Basic salary
The basic reflects role level, local market, responsibility and the amount of financial risk placed on the employee. A low basic may be acceptable to a proven biller if the commission route is transparent and achievable, but it can narrow the candidate pool.
Threshold
A threshold is the level of income or performance achieved before commission becomes payable. It should connect logically to the economics of the role and be explained with real examples.
Commission rate
This can be a flat percentage or increase through tiers. Tiering can motivate higher performance, but too many bands make monthly earnings difficult to predict.
Individual and branch elements
Individual commission rewards direct contribution. A branch element encourages teamwork and reduces disputes over shared deals, although it can frustrate strong performers if poor team results repeatedly remove their reward.
Guarantee period
New starters often inherit no pipeline. A short guarantee or reduced threshold can make the move commercially realistic while they build activity, particularly for instruction-winning and senior roles.
Three common structures
Flat personal commission
A fixed percentage applies after an agreed threshold. It is straightforward and makes personal effort visible, but needs clear rules for shared instructions, fall-throughs and delayed completions.
Tiered personal commission
The percentage increases as income rises. This can reward exceptional performance, provided the difference between each tier is meaningful and the calculation is not reset or altered unexpectedly.
Personal plus team performance
Part of the reward follows individual results and part follows the branch. This suits collaborative offices, but the team component should remain achievable and employees need to understand which results they can influence.
What should be written down
- Exactly what counts towards commission.
- Whether the calculation uses exchanged, completed, banked or received income.
- How shared deals and referrals are divided.
- What happens to cancellations, refunds and fall-throughs.
- The timing of payment.
- Rules during holiday, sickness, notice or garden leave.
- Whether targets can change and the process for doing so.
The contractual and employment-law wording should be prepared or checked by a suitably qualified adviser. The commercial model and the employee’s written terms must agree.
Test whether the OTE is credible
Work backwards from the advertised OTE using actual average fees, exchanges, lets, instructions or managed portfolio outcomes. Compare the required performance with what solid existing employees achieve—not only the best month produced by the top biller.
A credible package attracts better candidates and reduces the chance of a new employee leaving once the difference between advertised and achievable earnings becomes clear.
Build a clearer package and hiring pack.
The Agency People & Performance Toolkit brings salary and commission planning together with the advert, interview scorecard and onboarding plan.
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