In putting together a sales pay structure, the first step is to establish the right total cash compensation for the role, usually based on the market value. Recent hiring efforts and external salary surveys are good sources for Target Total Cash.
Once Target Total Cash is determined, the next step is to decide how much goes into the base pay (/salary), and how much into the variable incentive pay at target. The main determinants of pay mix are market practice and sales role prominence.
The following brief presentation explains the concept of role prominence, its relationship with pay mix, and how both feed into the development of a value-creating sales compensation pay structure.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.