Sales Compensation Plan Renewal

Every year David Chicelli and The Alexander Group do a survey on sales trends and practices.  I’ve just received the 2018 version, and while there are numerous percentiles, averages, and all sorts of numbers that would sate even the most hardened statistician, the most relevant data is on companies plans for their newest Plan year. This isn’t necessarily headline-making data, but it’s “attention-grabbing” if you are in a company that ignores this most basic principle of sales compensation planning and design, that being: Sales Compensation Plans Are Annual Plans And there’s the headline.  Here’s the context. Over 90% of participating…

Change in Plans…

A change in plans isn’t such a bad thing, it happens all the time. It’s raining, so we go to Plan B. The restaurant is closed so we go to another. These sorts of changes don’t seem to bother us so much. But change the compensation plan and watch out!!! The thing is, any compensation plan that hasn’t changed in a while is probably no longer an effective plan. Yet changes cause stress, uncertainty and certainly encounter resistance. One of my favorite quotes about change comes from Machiavelli and goes something like this: It must be considered that there is…

Nonexempt FLSA Earnings Threshold

It is official – we have the number, now it’s time to consider the effect. The number is $47,476 annually.  That’s the 40th percentile of earnings of full-time salaried workers in the lowest paid census region, the South.  And it adjusts every three years (the original rule would have adjusted every year but for voracious feedback from the HR community).  If you pay an employee less than that (in most cases), you’ll need to determine what next steps to take once the law takes effect on December 1, 2016. Here’s a link to the DOL announcement: https://www.dol.gov/whd/overtime/final2016/ According to a…

Think Outside the Box
A Periodic Challenge: New Mindset, New Results

A Cost-of-Labor Portfolio “What is our average compa-ratio Jim?” asked the CEO as I sat down to report on our annual focal exercise. Having been through enough of these meetings over the years, of course I had the answer; as a matter of fact, I had it calculated not only for the whole company, but for each division, each country and each corporate function. But I didn’t want to just spout off the answer, I wanted to educate him about how to think differently about his labor costs. Unfortunately, he had worked with enough compensation professionals over his storied career…

Is Sales Compensation Coming From the Battery Drawer?

My mouse started acting up the other day.  That usually means the batteries are wearing out, so I headed over to the battery drawer for two new batteries. What a mess.  Lots of batteries, that wasn’t the problem. I just had no idea if any of them were any good.  So I did what was necessary, which was try all the various combinations of those batteries until I got something like the performance I needed to make the mouse run again.  But at this rate I have no idea how long it’ll work because I somewhat randomized my chances for success…

Your Compensation Powers

Early in my career my bosses’ boss was showing me the ropes and explained that when it came to job evaluation, we in Compensation had “the strong power of recommendation.” The idea that the best I could do was to recommend something was a little hard to swallow.  Now I understand what hierarchy means and who gets to make decisions, especially those that commit funds in one way or another when it comes to compensation and rewards.  But who is really the most qualified to do that?  Who has primary ownership of the company’s strategies for competitive positioning, internal equity,…

The Simplicity of 3%

“When people complain of your complexity, they fail to remember that they made fun of your simplicity.” ― Michael Bassey Johnson Compensation is hard enough to understand without debating fractions, isn’t it? As if making something that is already so misunderstood, debated and difficult more complex would be a good thing! But a little complexity may just be needed as a check and validation that you are paying as you are intending to. Every year various surveys are taken that ask companies what their intentions are for the coming year for pay adjustments of all types – pay ranges, merit,…

I Could Tell You, But Then I’d Have to Kill You

I enjoy teaching a couple of compensation certification classes for WorldatWork, the association for total rewards professionals. I get a lot of questions about a lot of topics, but one that frequently surfaces – whether in a module or not – is “this is great, but would you tell your employees that?” And this isn’t some super-secret recipe for the incentive plan funding that makes you an insider, this is some of the compensation basics like pay grade, pay range, that sort of thing. So just to get it out of the way let me say that I am a…

Compensation Ticket to Ride!

Some friends recently introduced us to the board game Ticket to Ride.  For those of you who don’t know it or haven’t played, the goal of the game is to connect cities on a map (US, Europe, Asia and other versions) with train cars, based on the ticket you draw.  For example, Portland to Nashville is one of the tickets, and you can connect via Los Angeles, Denver, St. Louis, Atlanta, or any number of other routes.  You earn points by completing your tickets among other ways.  It’s a fun family game. I am very much a novice still.  Malcolm…

What Just Happened Here?

I’ve worked for a lot of great companies over my career, but not always for people that had the greatest insight into rewards and compensation. Sometimes that’s the HR leader, but more frequently it’s the CEO, or as I affectionately call him, the Chief Compensation Officer (CCO).  That could take the form of responses such as: “We need to make decisions that will enable us to save on expenses.” “I don’t hear a whole lot of negative feedback, it must be working.” “Turnover isn’t a problem so compensation must be OK.” “The Executive Committee needs to decide on our funding priorities.”…