Few things generate more interest than salary trend reports. People like to know what their peers are making.
The Alexander Group, a sales management consulting firm, released its 2015 Sales Compensation Trends Survey. More than six in 10 respondents (64.4 percent) plan to offer an increase in base pay this year, with the median budget increase being 3 percent.
The median increase in incentive pay in 2014 was 7 percent, widely exceeding the 3 percent increase that was projected. The report states that although sales departments regularly overspend their compensation budgets, 2014 was a “poster year” for this practice.
Other highlights from the report:
Increased staffing: About 64.6 percent plan to increase headcount in 2015. This is an improvement over 2014, when only 52.5 percent of these same companies increased headcount. The staffing expectations for 2015 reflect a positive ambition by sales leaders. Turnover remains constant at 10 percent – both projected and actual.
Revenue growth: Sales departments expect to grow revenue 7.5 percent in 2015. While expecting an 8 percent growth in 2014, sales departments achieved a 7 percent growth, a notable accomplishment. Sales projections affect many sales management programs, including productivity improvement efforts such as staffing and training, and reward programs such as sales compensation. Additionally, revenue projections will affect the size of assigned sales quotas, which, of course, affect incentive payouts.
Performance measures: Most sales compensation plans have three or fewer measures with sales revenue performance as the key metric. Two-thirds of the companies report that the best performers (90th percentile) can earn between two and three times their target incentive.
Recognition: 63.5 percent of the companies sponsor a president’s/winner’s club for select sellers. Most companies limit club participation to fewer than 25% of the sales force. 47.4 percent provide a company-sponsored recognition travel event. 51.6 percent spend 1 to 8 percent of eligible personnel W-2 earnings on club costs.
The 2015 Sales Compensation Trends Survey represents responses from 101 participants from a cross section of sales functions covering more than 52,500 sales professionals. Participants were polled in December 2014. Respondents must have at least 20 fulltime sales personnel.
