Compensation Strategies Michael Schmidtmann
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Transcript of Compensation Strategies Michael Schmidtmann
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Presented byMike Schmidtmann
John Gaillard
Compensation Strategies
Get Results without Overpaying
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What Happens when you Change
Compensation Plans?
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Top Executive and Engineer Found a New Company
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We are doing great. How come we don’t have any money?
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“Let’s sell our way out of this. Marketing. Leads. New People.”
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“Help!! We are about to run out of cash.”
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Our sales and margins are great. Where’s the problem?
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Sales Compensation: 33.7%
Sales Manager: 6.4%
Expenses & Benefits: 7.2%
Admin & Inside Sales:3.1%
Marketing & Lead Gen: 5.3%
Pre-Sales Engineering: 3.5%
Total Cost of Sale: 59.2% of GP
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How did we get in to this mess, and how do we get out of it?
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Compensation Metrics
& Tools
Aligning Incentives &
Strategy
Best Practices
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What is Your Biggest Compensation Problem?
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1. Comp Plans Don’t Change with the Times
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2. Total Cost of Sale is Too High - Overpay
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3. Requires Manual Calculations
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4. Isn’t Attractive to Potential New Hires
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5. Incents Wrong Behaviors
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6. Gray Areas & Loopholes
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7. Difficult to Change
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Compensation Metrics
& Tools
Aligning Incentives &
Strategy
Best Practices
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Comp as % of G.P.
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Total Sales Compensation
Total GP
Compensation as % of GP=
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<20%
25%
30%+
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Base Salaries
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Uncle Sam Doesn’t Care if
Your Compensation
is Salary or Commission
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Does Higher Comp Drive Higher Performance?
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$24,400 per Year
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$29,538,000 per Year
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1,000 Times More Money• Who is More Motivated?• Who Works Harder?• Who has a Better Attitude?
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Compensation Metrics
& Tools
Aligning Incentives &
Strategy
Best Practices
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Not to Pay People as Little as Possible
Get Maximum Productivity and Meet Profit Objectives
Make this a Shared, Team Mission
How Can we Make This a Win-Win?
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Give What They Value Most
Take Away Where They Value Least
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1. Change Variable Comp Plans Every Year
2. Tweak Account Base / Territories Every Year
3. Give Thought to Alignment – Plan Objectives and Work Backwards
4. Always Provide New “Sweeteners” with Every Change
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5. Salary Portion “At Risk”
6. Space Rewards Every 3-4 Months
7. Not All $$ Equal1. Pay for “Good $”2. Low Value = Low $
8. “Targeted Compensation”1. Earnings2. Objectives
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ONE CHANGE YOU CAN MAKE