PAY IT FORWARD. sales reward criteria. Oana Datki SEE Managing Partner. Bucharest

Transcription

1 PAY IT FORWARD sales reward criteria Oana Datki SEE Managing Partner Bucharest

2 Creating effective sales compensation plans Align compensation with company objectives Sales compensation does not replace sales management Careful execution is a must Ongoing evaluation of the compensation plan 17 June

3 Implications for Sales Perceptions 1. Sales reps become more concerned that pay decision making is fair. 2. Sales reps rely more on their plans to convey how performance will translate into pay. 3. Sales reps increasingly value the extent to which pay plans can mitigate risk. 1. Customers have more options and more buyers vetting each purchase. 2. Customers engage sellers later in the buying process, which results in weaker client-seller relationships. 3. Organizations are selling more complex products into increasingly volatile markets. Trends in the Selling Environment 17 June

4 Top Metrics Sales Organizations Use FINANCIAL Measures % of Budget / Quota / Goal Attained Sales by Customer Segment Sales by Product Type Sales by Geography ACTIVITY Measures # of New Account Calls # of Calls by Account Size # of Proposals Submitted / Closing Ratio # of Competitive Wins Sales To New vs. Existing Customers Forecast vs. Actual Results Expenses - Actual vs. Budget Average Revenue per Customer Salesperson Rankings in Company CUSTOMER Measures Customer Retention Ratio # of Buying Centers Within An Account 17 June

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8 What employees value the most *Global Compensation & Benefits: What s Working 17 June

9 Romania Annual Base Salary by Industry All Data Consumer Goods Durable Energy High-Tech Retail/Wholesale Trade Blue Collar Professional / Admin. / Staff Supervisors / Specialists Managers FMCG companies remain the best payers on the market IT&C and services providers are next in line, for staff and specialists, while Retail is the second runner up for supervisory positions 17 June

10 Romania TRS Year over Year Trends 86% of companies awarded salary increases in 2012, and 90% in 2013 on basis of: o Individual performance o Company performance / business unit performance o Position in salary range Merit increases have been awarded on a range between 0%-16% for positions such as: Customer Service Representative sr 5% Customer Service Technical Support Manager 8,5% Assistant Brand/Product Manager 9,2% Of all eligible employees only 25% of the them received a salary increase, the rest of the population (even if eligible) have remained on the same level due to individual performance results / company results the rule is PERFORMANCE and the game is for TALENTS Advertising/Marketing Communications Manager 15% 17 June

11 Romania Salary Movement Snapshot Survey Industry Comparison The salary movements above reflect the budgeted increase for the total payroll budget (including merit increases, promotions, lateral movements, new hires, replacements etc.) The individual increases range from 0% to 16% and are based on performance Mid Management and some senior specialist positions have decreased as real salary level on the general market 2013 estimations are even more conservative than this year 17 June

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13 Romania Sales Pay levels 17 June

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15 Romania Trends for Short-term Incentives Bonus Eligibility 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Para-Professional - "Blue Collar" Para-Professional - "White Collar" Professional Non-Sales Professional Sales Management Variable pay has been implemented by almost all organizations The focus on moving fix costs to variable costs linked with company performance is of essence These policies are in force in multinationals since 2010, and are just being slightly adjusted every year 17 June

16 Romania TRS What Are Short-term Incentives Based On? 17 June

17 Romania TRS Short Term Incentives Actual vs Target Bonus - median in RON Actual Target , Bonus target has not been reached in 2012 by any category and level of employees The actual amounts cashed in reflect the performance from the last financial year, and are almost at 50% of the bonus potential 0,25 0, , Blue Collar Professional / Admin. / Staff Supervisors / Specialists Managers 0,1 17 June

18 Romania TRS Short Term Incentives Actual Bonus - median in RON The actual amounts received as performance bonus, are much lower than last year Blue Collar Professional / Admin. / Staff Supervisors / Specialists Managers 17 June

19 Romania TRS Sales Incentives - median in RON For the sales force, the actual amounts are lower than targets for most categories Only the targets of the senior sales representatives have been achieved and even exceeded The approach of all companies if based on a TOTAL CASH perspective The % of the sales commission varies according to the actual amounts received 17 June

20 Composition of sales force 45 Age Head of Sales - Tier 3 Sales Manager Sales Manager - Regional District Sales Supervisor Sales Supervisor Sales Representative - Senior Sales Representative - Experienced Sales Representative - Entry June

21 Composition of sales force Tenure June

22 Composition of sales force Gender Sales Representative - Experienced Sales Representative - Senior Sales Supervisor District Sales Supervisor Sales Manager - Regional Sales Manager Head of Sales - Tier Male Female 17 June

23 Evaluating the sales compensation plans Pay mix 100% commission vs. Split base salary/commission Maximum Bonus No cap vs. Maximum bonus Timing Monthly vs. Quarterly 17 June

24 Influencers of employee commitment

25 Perception +11% My pay is fair My pay is in line with my role 17 June

26 Perception No link between performance and pay 50% sales people + performance measures increase perceived plan complexity Sales plan incentives do not reflect the importance of team contributions 2012 The Corporate Executive Board Company. 17 June

27 Greater motivation in plans with more variable pay. Perceived plan risk aggravates perceptions of plan complexity. Perceived high riskiness of pay plan drives harmful selling behaviors. Variability in cash flow increases likelihood of highperformer attrition The Corporate Executive Board Company. 17 June

28 Perceived fairness of sales targets significantly impacts employee performance. More frequent target revisions increase perceptions of fairness. Organization and manager fairness impact perceptions of incentive fairness The Corporate Executive Board Company. 17 June

29 Top 10 Ideas for Improving Sales Performance Selection Customer Retention Raising the Bar Compensation Sales Process Training Change Focus Coaching Measurement Support Systems 17 June

30 Sales Assessment & Development Romania Bulgaria Serbia Croatia Republica Moldova Bosnia&Herzegovina Macedonia Montenegro Austria Slovakia