There are three basic building blocks at the highest level of sales compensation. A salesperson’s base salaryand target incentivecombine to create one’s Target Total Compensation (TTC), or the cash that a salesperson should earn for hitting quota. The third building block, upside potential, defines the incentive beyond target that a high performer can earn for exceeding individual goals.
Believe it or not, some companies have very little to offer reps above quota. There’s minimal incentive for the reps to reach beyond their goals. Margin performers earn a fair amount of money relative to their target incentive, and those who burst through quota attainment aren’t suitably rewarded. Without realizing or understanding it, some companies act like Robin Hood — taking from the high performers and giving to the average and low performers. It’s the surest way to instigate a mass exodus of high performers and be stuck with the less talented lot who remain “loyal” to the company. These situations call for a Reverse Robin Hood.
Instead of paying low performers below threshold, the organization uses those funds to reward the top. How much cash should a top salesperson potentially earn in a given year? More than the manager? More than the head of sales? More than the CEO? The answer to this question is indicative of an organization’s pay philosophy and its ability to attract and retain the best talent in the industry. When we asked C-level executives, nearly all agreed that a top salesperson could earn more in a year than the head of sales.
While the earning rep may be a different person each year, and this earnings level may not be attained every year, that event would not be unheard of in the organization. In fact, C-level executives noted that these events would be motivational to the organization. “Sky’s the limit” potential is inspiring to reps who see no limits to their capabilities.
— Mark Donnolo
