What We Hear on the Street: What is the sales manager’s job, anyway?
I recently saw a survey that showed the mix of pay for both sales representatives and sales managers. The companies represented had a historical tendency to be in the technology market space, but not exclusively. We have used this survey source (Culpepper®) before in earlier E-Note discussions and consider it reliable. The results were interesting but a bit unexpected. They are shown in the table below.
We were not surprised to see to see sales representatives (in the Culpepper® survey) paid larger incentives (65% of salary). This is not in any way unusual and may reflect the background industry and the sample of responses, in general. But, we were surprised to see sales managers (in the same survey) with similarly-high incentives (55% of salary). As noted, we would expect to see sales managers paid incentives more in line with 25%+ of salary—but more importantly, having much lower incentives than their sales representatives. This does not mean they earn less. It just means salary is the driving force of their pay.
We can spend a lot words and time trying to explain why we see these variations between this survey data and those of more general and historical practices, but that is potentially an open-ended and pointless exercise. However, we have historically found that unusually-high incentives for sales managers can be indicative of a more compelling job-design problem—that may or may not exist here.
The job-design problem we allude to is confusion over the required role of a sales manager. Let me outline below what I believe a sales manager must (and is paid to) do.
- Evaluate, mentor and train the sales force;
- Plan sales activities and deploy sales resources; and
- Recruit next year’s sales force.
Nowhere in the above description did I say “sell.” This is true because, we believe that sales managers are being paid to maximize the quality and productivity of their sales force. They are primarily managing and directing resources, seldom engaged in direct selling.
This description (if you buy it) requires that we recognize the manager’s unique and developed skill and pay them incentives based on the achievements of their sales force. This typically results in sales-manager pay plans with a higher salary and lower incentive mix than a sales rep.
If your sales manager is spending more than 20% their time (I will give them that) selling and/or you are encouraging them to spend most of their time as a sales rep, then who is managing the sales force? Are you? Well, someone needs to!