Every network marketing company must have a compliance department; this department makes sure that your distributors follow the rules that you set up. Most people think that this department primarily exists to keep a company from getting in trouble with the FTC and other agencies. This is only partly true; the other major reason that companies must have a compliance dept is to keep peace with and between your distributors, because when they start battling the company or each other it can mark the beginning of the end for even the best company. When setting up a compliance department and the rules they enforce, a company needs to remember the old saying "Above All Else Do No Harm".
Today I am going to discuss the 2 most common policies that create problems for companies.
Transferring Sponsors:
In some companies it is possible for a distributor to decide they want to move their distributorship under a different sponsor. In my experience it is always a bad idea to allow this. Sometimes a company will say, "If your sponsor doesn't support you, you can move". But how do you decide if they supported their downline? And once someone requests to move and his or her sponsor opposes it, no matter what the company decides someone is mad.
The real problem comes down to this, if a company allows transferring downlines for any reason -- there will be distributors who decide it is easier to build their downline by convincing people to move from other downlines than to go sponsor new distributors, and this always causes problems.
Commission Plan Requirements
A commission plan can have the unintended effect of pitting distributors against each other. Let me give you a two of examples how this can happen with rank advancements:
To require a distributor to have 3 first level Poohbahs to become a Senior Poohbah, and have 3 Senior Poohbahs to be a Master Poohbah, etc.
To require a Senior Poohbah to have 3 first level Poohbahs, a Master Poohbah to have 10 Poohbahs, etc.
Both of these methods of rank advancements are quite common, but can create real problems and this is how.
If Bill is trying to achieve the rank of Master Poohbah, and sponsored Mary who is not a Poohbah, but has sponsored a Senior Poohbah. In both of these examples Bill has 3 courses of action;
1. Help Mary become a Senior.
2. Try to get Mary terminated.
3. In some companies Bill can buy out Mary's distributorship.
Companies can avoid pitting distributors against each other in this way by using basing requirements on the number of qualified Seniors within a downline leg, and/or using compressed first levels for their requirements.
I have only given you a couple of ways in which the company rules can make the job of a compliance department much harder. There are many others, in my experience the Policies and Procedures of a company sometimes get the least amount of thought but can have the greatest amount of impact on how smoothly your company runs.
Mark Rawlins
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