• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sylvina Consulting, Inc.

Compensation Plan & Direct Selling Experts

  • 503.244.8787
  • About
    • The Sylvina Difference
    • Team Members
    • Our Mission
  • Reviews
    • Letters From Clients
    • More Reviews
  • Services
    • Expert Witness
    • Business Plans
    • Compensation Plans
    • Coaching For Companies
    • MLM Software Advice
    • Consulting For Startups
      • MLM Consulting
      • Party Plan Consulting
    • Consulting For Established Companies
      • MLM Consulting
      • Party Plan Consulting
  • Books and Conferences
    • Our “Start Here” Guide
    • — Reviews of Our Guide
    • Our MLM Software Book
    • Direct Selling Edge Conference
    • — Reviews of Direct Selling Edge Conference
    • Compensation Plan Conference Webinar
    • — Reviews of Compensation Plan Conference Webinar
    • All Events
    • Our Vimeo Channel
  • Articles
    • A-L Articles
      • All Videos
      • Business Plans
      • Communication
      • Compensation Plans
      • Direct Selling Events
      • Enrollment Options and Starter Kits
      • Hostesses
      • Interviews
      • Key Operating Indicators
      • Leadership
      • Legal
    • M-Z Articles
      • MLM Software
      • Pilot Programs
      • Policies & Procedures
      • Products
      • Recognition
      • Recruiting
      • Retention
      • Social Media
      • Startups
      • Training
  • Newsletters
    • Free Subscription
  • FAQ
  • Contact
You are here: Home / Compensation Plans / Are Simple Compensation Plans Safer?

Are Simple Compensation Plans Safer?

March 19, 2017 By admin Leave a Comment

direct selling edgeAt our Direct Selling Edge Conference this month, I was asked if simple compensation plans were safer.

Before giving my answer, I took a big breath and then gave myself a few moments for an additional pause.  This was an important question with an even more important two-part answer.

A Legal Perspective

Given the regulatory action against Vemma and Herbalife in the last few years, I understood why I was asked this question, so I responded first to this concern.

I explained that one of the objections raised by uninformed regulators and critics of direct selling has been the complexity of multilevel compensation plans.   Some of them believe incorrectly that a complex compensation plan is a symptom of a criminal enterprise.

This conclusion is as absurd as saying that suits are a marker for illegal activities because white-collar criminals wear them.

As long as your compensation plan in practice does not violate federal, state, and local laws, it can be as complex as is necessary.  Remember, the purpose of compensation plans is to motivate and reward the 12 essential behaviors we all want from a direct selling sales force.

A Business Perspective

If you own or are employed by a network marketing or party plan company, two of your primary goals should be to attract and retain your independent sales representatives.

Simple multilevel compensation plans don’t accomplish these goals.

To find out what’s wrong with simple compensation plans, watch my 5-minute video The Answer:  Why Simple Compensation Plans Don’t Work.

Can We Start With A Simple Compensation Plan?

Some companies think about starting with a simple compensation plan, with the idea to change their plan later.  This is not a good idea.  At a minimum, it will reduce your rate of growth significantly, but even worse it may be a cause of business failure.

Most companies cannot afford a “do-over.”  For financial reasons, they need to get it right the first time.

I don’t recommend that you begin your direct selling company with a simple compensation plan and then change your plan later.  Here’s why…

  1. 50% of the people who consider joining your direct selling company will have had previous experiences as independent reps of other direct selling companies, and about half of them will want to see your compensation plan before joining.
  2. For those who have been successful with other companies, when they see your plan is not a good one, they will decide not to join your company.
  3. Also, if your compensation plan does not pay leaders well, they will decide not to join.
  4. They won’t ask you to change your plan or tell you why they won’t be participating.  This will just pass on your opportunity and go somewhere else.
  5. Do you want leaders to not join your company when your company is young?
  6. Can your business afford to have them join other companies and not yours?
  7. For those who do join your company and begin to build organizations, do you want them to leave (and to tell others to leave with them) when they realize the compensation plan will not pay them deeply enough?
  8. Do you want people to be able to earn full-time incomes through your income opportunity?  With simple plans, it’s too hard or impossible.
  9. Changing a compensation plan later can be difficult, but not impossible, to do.  Don’t launch your company with one plan that you know will be replaced soon.  Only change your compensation plan if you learn later that it’s necessary.

Why People Design Simple Compensation Plans

If you’re curious as to why people design simple compensation plans, read Why Do People Design Simple Compensation Plans?

Conclusion

Simple compensation plans are not safer for the survival of your business.  The word I would use to describe them is “unsafe.”

Free Compensation Plan Review

Find out if your compensation plan is in good shape, or if it needs to be improved.  Contact Sylvina Consulting for a free professional compensation plan review.

 

Filed Under: Compensation Plans, Legal Tagged With: compensation plan, simple compensation plan

About Jay Leisner

P15Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving network marketing, party plan and referral marketing companies across the globe.

Direct Selling Startup GuideJay Leisner and Victoria Dohr authored the top-rated book for new and young network marketing, referral marketing, and party plan companies, "Start Here: The Guide to Building and Growing Your Direct Selling Company".

Available in English and Spanish. This startup guide contains 250 pages of wisdom that will guide you through the right steps to start and continue on your journey to build a successful direct selling company.

You will save thousands of dollars and hundreds of hours of your time using the information you will read in our book.

In 1986, Jay began his career in direct selling by working for a major direct selling software provider. First as a software developer and later as a project leader and a business analyst, Jay worked closely with new and established network marketing and party direct selling companies to provide them with software solutions to meet their unique requirements.

Jay contributed in many ways to the success of large implementation projects for many companies. Jay also worked with dozens of smaller companies to assist each of them in various capacities to provide them with the systems they needed to help their businesses to grow faster.

Along the way while working with them, he learned the secrets of successful direct selling companies and the challenges faced by them. In true entrepreneurial spirit, Jay’s decision in 1999 to start Sylvina Consulting as a direct selling consulting company was driven by what he saw was a need for answers, advice, and solutions.

In 2004, 2006, 2009, 2014, and 2018, Jay gave presentations on compensation plans, recognition, and field leadership development at conferences held by the US Direct Selling Association.

He traveled to South Africa in 2015, 2016, and 2017 to conduct workshops on compensation plan design and recognition programs for member companies of the South African Direct Selling Association.

In 2017, Jay spoke at the Canadian Direct Sellers Association Meeting on the importance of recognition.

More than just a compensation plan expert, Jay is exceptionally skilled at advising new and established companies on business strategies. Before offering advice or solutions, he asks important questions to understand each client’s specific concerns and goals.

Subscribe for FREE to receive our monthly email newsletters.

Topics

  • All Videos (122)
  • Business Plans (43)
  • Communication (54)
  • Compensation Plans (157)
  • Customers (22)
  • Direct Selling Events (50)
  • Enrollment Options and Starter Kits (16)
  • Featured (2)
  • Hostesses (16)
  • Interviews (4)
  • Key Operating Indicators (12)
  • Leadership (24)
  • Legal (41)
  • Merchant Accounts (1)
  • MLM Software (45)
  • Pilot Programs (7)
  • Policies & Procedures (30)
  • Products (50)
  • Recognition (18)
  • Recruiting (43)
  • Retention (21)
  • Social Media (13)
  • Startups (62)
  • Training (35)

Most Recent Posts

  • Why Do MLM Software Implementations Fail?
  • Compensation Plan Prototyping
  • Merchant Account Application Wisdom
  • VP Of Sales – How To Save Yourself
  • How Do I Attract Top Leaders To My Company?
  • Why Are Direct Selling Companies Struggling?
  • About Compensation Plan Transitions
  • Is It Ever A Good Idea To Pay People Only Through Bonus Pools?
  • How To Avoid Project Failure
  • Who Should Be Present When A Compensation Plan Is Designed or Improved?

Reader Interactions

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

Startup and Grow Guide





Get Our 20 Secrets Report And Monthly Newsletters





Expert Witness

Discover The Sylvina Difference



Watch, Listen & Learn



Follow Sylvina Consulting

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

Footer

Contact Us

Office: 503.244.8787
Cell: 503.784.7873
Email: jay [at] sylvina.com

 

Follow Us

Search This Website

Copyright © 2025 Sylvina Consulting, Inc., 4931 SW 76th Avenue, PMB 205, Portland, OR 97225 USA, office 503.244.8787 cell 503.784.7873 || Log in

  • About
  • Services
  • Reviews
  • Articles
  • Newsletters
  • FAQ
  • Contact
 

Loading Comments...