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May 06, 2010
Compensation Costs for Sales Staff in a Competitive Economy

In a BLR webinar entitled "Sales Compensation Strategies: How to Motivate and Re-Energize Your Sales Staff in a Challenging Economy," Dan Kleinman, principal of Dan Kleinman Consulting, a compensation and human resource consulting firm, explained the necessity of keeping total compensation competitive.

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At the same time, it is important to keep the mix your own! Beware of institutionalized costs, and beware of perceived entitlements.

  • Performance below threshold is risky.
  • Performance at threshold may provide less than the market remuneration.
  • Performance beyond target has substantial upside pay potential.

Compensation costs need to discriminate on the basis of results. There needs to be meaningful differentiation between top and bottom performers. A distribution example might be:

  • 20% of the population are out of the money
  • 20% achieve threshold goals
  • 45% meet target goals (or slightly above)
  • 10% exceed target substantially
  • 5% are absolute rainmakers

Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. For the past 18 years, he has served as an independent consultant for a broad spectrum of regional, national, and international companies, providing compensation, performance, organizational planning, and reward-system design services. He may be reached at info@dankleinmanconsulting.com

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