compensation strategies michael schmidtmann
DESCRIPTION
How do you find the right balance between base and incentive compensation? How much risk & reward should your salespeople and engineers have? Are you overpaying your people? This session provides a basic overview of the key elements of incentive compensation, and reviews the decisions you need to make in order to craft optimal plans for your company. You will learn the wide variety of plans offered in our business, with best practices taken from hundreds of Solution Providers across North America. •How to craft offers to attract talent •What compensation metrics are important, and how yours compare •Incenting the right behaviors This session is led by John Gaillard and Mike Schmidtmann, who work with Solution Providers across the country to grow their businesses and improve profits.TRANSCRIPT
Presented byMike Schmidtmann
John Gaillard
Compensation Strategies
Get Results without Overpaying
What Happens when you Change
Compensation Plans?
Top Executive and Engineer Found a New Company
We are doing great. How come we don’t have any money?
“Let’s sell our way out of this. Marketing. Leads. New People.”
“Help!! We are about to run out of cash.”
Our sales and margins are great. Where’s the problem?
Sales Compensation: 33.7%
Sales Manager: 6.4%
Expenses & Benefits: 7.2%
Admin & Inside Sales:3.1%
Marketing & Lead Gen: 5.3%
Pre-Sales Engineering: 3.5%
Total Cost of Sale: 59.2% of GP
How did we get in to this mess, and how do we get out of it?
Compensation Metrics
& Tools
Aligning Incentives &
Strategy
Best Practices
What is Your Biggest Compensation Problem?
1. Comp Plans Don’t Change with the Times
2. Total Cost of Sale is Too High - Overpay
3. Requires Manual Calculations
4. Isn’t Attractive to Potential New Hires
5. Incents Wrong Behaviors
6. Gray Areas & Loopholes
7. Difficult to Change
Compensation Metrics
& Tools
Aligning Incentives &
Strategy
Best Practices
Comp as % of G.P.
Total Sales Compensation
Total GP
Compensation as % of GP=
<20%
25%
30%+
Base Salaries
Uncle Sam Doesn’t Care if
Your Compensation
is Salary or Commission
Does Higher Comp Drive Higher Performance?
$24,400 per Year
$29,538,000 per Year
1,000 Times More Money• Who is More Motivated?• Who Works Harder?• Who has a Better Attitude?
Compensation Metrics
& Tools
Aligning Incentives &
Strategy
Best Practices
Not to Pay People as Little as Possible
Get Maximum Productivity and Meet Profit Objectives
Make this a Shared, Team Mission
How Can we Make This a Win-Win?
Give What They Value Most
Take Away Where They Value Least
1. Change Variable Comp Plans Every Year
2. Tweak Account Base / Territories Every Year
3. Give Thought to Alignment – Plan Objectives and Work Backwards
4. Always Provide New “Sweeteners” with Every Change
5. Salary Portion “At Risk”
6. Space Rewards Every 3-4 Months
7. Not All $$ Equal1. Pay for “Good $”2. Low Value = Low $
8. “Targeted Compensation”1. Earnings2. Objectives
ONE CHANGE YOU CAN MAKE