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.
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 email@example.com