If you’re going to have base pay, manage it, varying base pay levels to differentiate among people based on value-creating attributes that don’t change year over year.
Target Total Compensation (TTC) is the amount of pay that a role (not a person) is expected to earn at 100% of expected performance. This number is absolutely essential to developing sound compensation plans. Without it you will not know who is doing better than expected and who is doing worse. Compared to what?
Many sales leaders and CFOs feel there are real business benefits to a high-risk / high-upside comp plan, including a reduced cost of compensation overall. Turns out they’re wrong about the cost…
Sales Compensation Focus, July 2010 – The economy appears to have taken a positive turn and many companies are starting to think about growth: hiring more sales reps, launching a new product, or breaking into a new market segment. One of the first questions that is raised when a company returns to growth mode, especially if there has been significant retrenching, is, “What should we do with our sales compensation plans?”
Start by thinking about sales prominence. Has it changed? Do the sales people have more control over their own success, or less?