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Case Study in Sales Force Compensation
A moderate sized software company found that it was experiencing annual sales rep turnover levels of over 50% with employees who were employed over two years and less than five years. Nearly all of these employees had been recruited and hired directly from the college campus.
After interviewing over fifty employees and conducting an analysis of sales pay competitiveness and incentive plan design, it was found that:
The competitiveness of sales pay for an employee with 2+ years of tenure was lagging the market and not increasing;
The pay plan paid moderate to small bonuses consistent with a detail-oriented selling job. However, sales force was recruited with visions of large commissions and opportunity. There was a mismatch between the needs of (profile) of the sales force and the actual job. The sales force was very unhappy.
To address this situation, pay levels have been adjusted to a fair-market positions, hiring profiles have been revised to meet actual job conditions (stop the promises!), and the pay plan was redesigned to pay a larger incentive for performance.
See Wilkening & Company's White Paper on sales force turnover entitled: Sales Force Turnover The Hidden Cost of Selling. |
