I need help from the mathmeticians

[Mike Gallo]

I would appreciate any help from the mathematically gifted. I do not consider this a poker problem, however I think the formula needed to solve this can apply to poker.

I need help figuring out a formula to compensate my employees a commission based on money they earn for my company.

I work in the collection industry and my company works on a contigency. In other words if we collect money we earn a fee. If we do not collect the account we do not get paid a fee. If an account gets overworked, or doesnt get worked properly, we lose money.

I will give all of the pertinent information and if anyone would offer a formula I would feel much gratitude.

Here is some of the information, if I need more please post what information I have left out.

A collector makes $10 an hour and works a 37.5 hour week. The average collector works 150 hours a month.

My company charges a contigency of 35%. That means for every 100 collected the company makes $35. Roughly 20% of the fee we earn goes toward operating expenses such as other employees salaries, data entry, ect.

I need to figure out the minimum amount of money or a quota that a collector needs to collect before I can offer a commission. I thought of paying them 25% of the fee above that quota.

Thanks

Michael

[lorinda]

I think we need some information about the distribution of the ammounts each collector would gather on average.

For instance

20% gather 100 or less per hour
50% gather 101-300 per hour
30% gather 301-500 per hour
20% gather 501+ per hour

along those lines.
I am far from the best mathmo on this group, but I do have a decent grasp of the subject, I am fairly sure we need at least this data (maybe more) to tackle the problem

[Mike Gallo]

I have some information I forgot to include.

I have to pay commission to a collection staff of five.
I need to figure out how much each collector needs to collect to show a profit. The money will go into a kitty and each collector gets a percentage of that based on performance. The more a collector contributes towards the money, the more they see of it. Usually each collector earns 20%.

On average we recieve upwards of $250,000 worth of new accounts each month. We usually receive 1600 new accounts a month. How much would I need to collect to show a profit. we have a profit margin of 10% of fees collected.

I project we will collect $40,000 dollars this month, with an average increase of 8.00% each month. However we will have a few bad months where we will only hit $40,000, standard deviation applies to the collection world as well.

Many thanks, I will think of more information that I can supply.

MG

[jdoe]

hey mg!

I have been in the collection industry for about 8 years or so. I have come up with similar situation as you. I have found that is is very important to make a sliding scale on results. As you know some people are excellent collectors some are not. First consider that you may be paying too much per hour to start and comission may be too low.

I know a guy who knows a guy that ran a collection dept for one of the big 3 automakers's credit arm. this is what they did.

per month

collected comm rate
0-2000 = .01
2001 to 5000 = .02
5000 to 10000 = .035
10001 to 25000 = .035 + 2 tickets to vegas
25001 to 50000 = .035 + 2 ticket to vegas + 1000 cash
50000 to 100000 = .035 + 2 ticket to vegas + 5000 cash


now these numbers are not accurate, they are just an illistration of how to motivate a collection staff. when someone hits a big bonus pay it in cash, in front of the rest of the staff (like at a staff meeting) you will get more bang for the buck.

feel free to email me
jpkruse@yahoo.com