compensation strategies michael schmidtmann

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