What Should You Pay Your Employees?
Many companies guess at what to pay employees. Often they will hire key people and offer them the same or a bit more than what they made at their prior employer. This method is problematic because over time, employees will likely earn more or less than market. What you pay a person is critical to your operation and your decision on how much to pay should not be a guesstimate. It could translate to thousands of dollars of overhead or loss of productivity depending on where you priced your company. Below is just a partial list of services we offer.
Compensation Plans
• Creating a compensation (pay) system from scratch
• Market Analysis-which is knowing what to pay based on the going rates
• Job Analysis-which is understanding all aspects of the job in order to create a reliable job description
• Job Descriptions-which is a single document that enables a company to describe the job.
• Job Evaluations-which is putting a certain value on the job based on a combination of factors. We used basic methods but can create simple Point Factor Analysis.
Commission Plans
The methodology of developing pay systems for salespeople has evolved over the past 20 years. Despite all these changes, our President has found that the problem with ineffective sales departments remain the same. They can be summed up in three key areas.
1) Poor Hiring Practices
2) Ineffective Training & Management of Sales
3) Poorly Built Commision Plans
We can help with any of the above prolems but we are experts in setting up or modifying Sales Commission Plans. Whether you decide to use O'Peka Consulting or another expert in the field, please take the time to have your plan reviewed by a professional. This is one area that you don't want to experiment with because when it comes to sales for a company: Time is Money.
A Blog About
Writing Effective Sales Commission Plans
by Cindy O'Peka SPHR, President, O'Peka Consulting
Commission Plans for salespeople, or anyone responsible for generating income can make or break a company. A well written plan is the key. This is one area a company should never “wing it.” Do not, repeat-do not go to Salary.com, and decide this is your method for paying your salesperson or staff. The is the number on mistake companies make. Here are some tips when putting together a plan.
Things to Consider
- Your plan must create a win/win for both your company and your sales
team. This generally goes without saying, but there are some companies
that want to offer as little as possible in hopes of keeping their
profit margins solid. This will ultimately result in desperate hires
and poor performance. Salespeople need to be adequately rewarded for
their efforts.
- Your plan must factor in your growth strategy, and integrate the
company's ROI (return on investment) for your product or service. This
is the number one problem companies have when developing a plan. They
ofen make it too simplistic and end up with substantial sales in an
area with low margins. This is where an expert can prove
instrumental-by helping to create a plan that will have the biggest
impact on your company's bottom line.
- The plan must be unique to your company. Like a fingerprint, no two
sales commission plans can be alike. They can be similar based on
industry but there are small differences in your corporate culture,
your sales cycle, your growth stage, you cash flow, the current economy
and more. The plan must change and grow with your needs.
Summary:
It is ironic that companies will invest thousands of dollars into a
start-up venture and then cut corners when it comes to putting together
a plan that can help their business grow. They waste months
or even years creating "trial and error" commission
plans designed with no input from a compenation
expert. They end up spending thousands of dollars
in sales training, employee turnover, client turnover and
more. The amount of money they have lost due to
lackluster sales is difficult to factor but there is no doubt it
equates into the thousands or perhaps millions. A
good commision plan isn't a magic wand to save a company, but is
certainly is one of the most critical components for the health and
future of an organization.
