Differentiating Employee Value Proposition for the Sales Force

Differentiating Employee Value Proposition for the Sales Force

Scott SandsGlobal Practice Leader, Sales Force EffectivenessHewitt Associates

2009 Total Rewards Conference & Exhibition2

Presentation OverviewElements of the Employee Value Proposition

Hypothesis 1: Sales people, as long suspected, will be highly motivated by short-term cash compensation

Hypothesis 2: Senior sales reps’ criteria evolve to be different from junior reps, specifically increasing value on non-compensation elements

Hypothesis 3: Both top performing and highly engaged reps will be more focused on “Selling Environment” factors than pure compensation, independent of geography

Findings and Conclusions


The WorldatWork’s EVP Model


Surveyed EVP Elements Specific to SalesDirect Financial Compensation

Base Salary

Target Incentive

Upside Availability

Equity

Indirect Financial CompensationHealthcare

Retirement

PTO

Company Car


Surveyed EVP Elements Specific to SalesCompany Affiliation

Company Strength

Company Culture

Career DevelopmentAdvancement Opportunities

Training

Selling EnvironmentQuota Size

Leadflow


Survey MethodologyGathered responses from over 1200 sales representatives and first line managers

Used online survey tool

Combined “rate-and-rank” questions with a “conjoint lite”approach to determining trade-offs and preferences

Survey was open for two months during the Winter of 2009…a unique economic period

There is a relatively even mix of industries, seniority, geographies and hierarchy, but we are keeping the survey open to encourage more submissions and monitor change over time


Why did we feel this research was critical?The sales role is significantly different than other corporate roles:

IndependentRemoteDirect Line of Sight to Financial ResultsCustomer ContactPay PremiumRisk Intense

We did not see previous research addressing unique aspects of the sales role

Companies need high ROI tools for this economic period


We see sales teams leaning heavily on compensation, instead of other levers

We help our clients improve sales performance by getting the most out of their investments in sales people, creating a rewarding

environment for sales people and company shareholders

Realize Business Impact

Performance and Rewards

– Selling and Service Model

– Job Roles and Structure

– Deployment Planning

– Recruiting and Selection

– Career Paths

– Training and Development

– Compensation and Recognition

– Quotas and Measurement

– Performance Management

Talent Management

Organization Design

Creating a sales structure that is effective in meeting customer needs in an efficient manner…

Ensuring the availability of the right talent for the right role at the right time…

Maximizing the productivityof an engaged sales force to exceed business goals…

Align the Sales Force

Customer Insight

Business Strategies

Value Proposition

Competitive Dynamics

Understand Business Drivers


Even the sub-components of sales compensation have unique appeal

1. Business Objectives, Sales Strategy, & Roles

2.Eligibility

3.Target Pay Levels

6.Measures/Weights

5.Upside Opportunity

8.Quotas/Crediting

9.Payout Timing

4.Pay Mix

7.Mechanics

10.Administration

Competitive Aligned Effective


Hypothesis 1: Sales people are highly motivated by short-term cash compensation

Importance of Each Factor in Deciding Whether to Stay in Role or Take Another

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip

Equity/Stock Grants

Value of Sales Leads Provided

Sales Training Provided

Quota Size

Paid Time Off

Company Culture

Company Strength

Retirement Benefits

Future Career Advancement

Health Benefits

Base Salary

Variable Incentive Opportunity

Perc

ent o

f Res

pond

ents

Not a Consideration Not Important, but Considered Important Critical


Importance of Each Factor in Motivating You to Perform

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip



Equity/Stock Grants

Company Strength

Retirement Benefits

Paid Time Off

Company Culture

Health Benefits


Quota Size

Base Salary


Perc

ent o

f Res

pond

ents


Hypothesis 1: Sales people are highly motivated by short-term cash compensation


Evaluating Base, Variable and Quota(total population)

Package Description# of Respondents

Choosing As

% of Respondents Choosing As

Package Base Variable Quota n Top Bottom Top Bottom Rank

A $50,000 $50,000 $1.1 M 957 29 63 3% 7% 2.9

B $40,000 $60,000 $1.2 M 954 6 618 1% 65% 4.2

C $40,000 $60,000 $1.0 M 950 63 93 7% 10% 3.3

D $60,000 $40,000 $1.2 M 952 78 117 8% 12% 2.6

E $60,000 $40,000 $1.0 M 962 467 22 49% 2% 1.7

F $50,000 $60,000 $1.2 M 957 320 38 33% 4% 2.0




Choosing As



A $50,000 $50,000 $1.1 M 957 29 63 3% 7% 2.9

B $40,000 $60,000 $1.2 M 954 6 618 1% 65% 4.2

C $40,000 $60,000 $1.0 M 950 63 93 7% 10% 3.3

D $60,000 $40,000 $1.2 M 952 78 117 8% 12% 2.6

E $60,000 $40,000 $1.0 M 962 467 22 49% 2% 1.7

F $50,000 $60,000 $1.2 M 957 320 38 33% 4% 2.0


Evaluating Quota, Mix and Acceleration(total population)


Choosing As


Package Quota Pay Mix

Above Quota

Acceleration n Top Bottom Top BottomAverage

Rank

A $1.1 M 50/50 2x 929 13 87 1% 9% 3.3

B $1.2 M 40/60 2x 925 3 612 0% 66% 4.1

C $1.0 M 40/60 3x 928 215 45 23% 5% 2.6

D $1.2 M 60/40 3x 936 448 21 48% 2% 1.6

E $1.0 M 60/40 2x 929 155 125 17% 13% 2.5

F $1.2 M 50/50 3x 934 102 37 11% 4% 2.1




Choosing As



Above Quota


Rank

A $1.1 M 50/50 2x 929 13 87 1% 9% 3.3

B $1.2 M 40/60 2x 925 3 612 0% 66% 4.1

C $1.0 M 40/60 3x 928 215 45 23% 5% 2.6

D $1.2 M 60/40 3x 936 448 21 48% 2% 1.6

E $1.0 M 60/40 2x 929 155 125 17% 13% 2.5

F $1.2 M 50/50 3x 934 102 37 11% 4% 2.1


Evaluating Quota, Mix and Leadflow(total population)


Choosing As


Package Quota Pay MixQualified

Leads n Top Bottom Top BottomAverage Rank*

A $1.1 M 60/40 500 884 357 68 40% 8% 1.8

B $1.2 M 60/40 600 885 227 97 26% 11% 2.0

C $1.0 M 40/60 500 882 102 214 12% 24% 3.2

D $1.2 M 40/60 600 882 54 358 6% 41% 3.4

E $1.0 M 50/50 600 888 129 21 15% 2% 2.1

F $1.2 M 50/50 500 885 22 124 2% 14% 3.0




Choosing As




A $1.1 M 60/40 500 884 357 68 40% 8% 1.8

B $1.2 M 60/40 600 885 227 97 26% 11% 2.0

C $1.0 M 40/60 500 882 102 214 12% 24% 3.2

D $1.2 M 40/60 600 882 54 358 6% 41% 3.4

E $1.0 M 50/50 600 888 129 21 15% 2% 2.1

F $1.2 M 50/50 500 885 22 124 2% 14% 3.0


Each package has a different payout – rep confidence is critical to assessing value

Six Packages - Payout

$0.00$20,000.00$40,000.00$60,000.00$80,000.00

$100,000.00$120,000.00$140,000.00$160,000.00$180,000.00$200,000.00

1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000

Avg. Lead Value

Payo

ut

ABCDEF



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip

Equity/Stock Grants



Quota Size

Paid Time Off

Company Culture

Company Strength

Retirement Benefits


Health Benefits

Base Salary


Perc

ent o

f Res

pond

ents


Hypothesis 2: Senior sales reps are driven by different elements than junior reps

(<10 Years in Sales)



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip



Equity/Stock Grants

Company Strength

Retirement Benefits

Paid Time Off

Company Culture

Health Benefits


Quota Size

Base Salary


Perc

ent o

f Res

pond

ents



(<10 Years in Sales)



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip

Equity/Stock Grants



Quota Size

Paid Time Off

Company Culture

Company Strength

Retirement Benefits


Health Benefits

Base Salary


Perc

ent o

f Res

pond

ents



(>10 Years in Sales)

XX



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip



Equity/Stock Grants

Company Strength

Retirement Benefits

Paid Time Off

Company Culture

Health Benefits


Quota Size

Base Salary


Perc

ent o

f Res

pond

ents



(>10 Years in Sales)

??


First Packages - Drivers by Sales Tenure

0%10%20%30%40%50%60%70%80%90%

Lessthan2yrs

2-5yrs 5-10yrs

10-15yrs

15-20yrs

20-25yrs

Over25yrs

Base SalaryQuotaTTC

Over time, base salary becomes less important as sales people select a package

XX


Second Packages - Drivers by Sales Tenure

0%10%20%30%40%50%60%70%80%90%

Lessthan2yrs

2-5yrs 5-10yrs 10-15yrs

15-20yrs

20-25yrs

Over25yrs

Base SalaryQuotaAccelerator

Over time, upside acceleration becomes more important to senior sales people

XX


Third Packages - Drivers by Sales Tenure

0%10%20%30%40%50%60%70%80%90%

100%

Lessthan2yrs

2-5yrs 5-10yrs 10-15yrs

15-20yrs

20-25yrs

Over25yrs

Base SalaryQuotaLeadflow

Over time, leadflow becomes moderately more important to senior sales people

XX



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip

Equity/Stock Grants



Quota Size

Paid Time Off

Company Culture

Company Strength

Retirement Benefits


Health Benefits

Base Salary


Perc

ent o

f Res

pond

ents


Top performers’ selection criteria mirrored the overall populations’ priorities

(Top 10% Performers)

XX



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip



Equity/Stock Grants

Company Strength

Retirement Benefits

Paid Time Off

Company Culture

Health Benefits


Quota Size

Base Salary


Perc

ent o

f Res

pond

ents


Top performers also showed a distinct reliance on variable pay for motivation

(Top 10% Performers)

XX



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip

Equity/Stock Grants



Quota Size

Paid Time Off

Company Culture

Company Strength

Retirement Benefits


Health Benefits

Base Salary


Perc

ent o

f Res

pond

ents


Highly engaged sales people tend to credit the strength of the company with their status

(Highly Engaged)



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Company Car

Recognition Trip



Equity/Stock Grants

Company Strength

Retirement Benefits

Paid Time Off

Company Culture

Health Benefits


Quota Size

Base Salary


Perc

ent o

f Res

pond

ents


Highly engaged sales people are still motivated by variable pay, but career rises

(Highly Engaged)

XX


What did sales people have to say?“All the above

compensation plans are only relevant if quotas are

set accurately. Without realistic quotas there will be a major lack of motivation.”

“Having a base salary that you can exist on is critical.

If I don't have to stress about making enough to

support my family - I work much harder to over

achieve on the incentive part of my compensation.”

“Six years ago I would have chosen the higher risk, lower base

pay and higher incentive plan because business was good and it

was easier to hit my quota.”

“Accelerators are no benefit if targets are set

so high that that they are unattainable.”


What did sales people have to say?“Effective sales people always set their sight beyond the 100% achievement. Incentives after quota is what makes the game

interesting and keeps me motivated.”

“Preference is going to be for a higher at risk when combined with higher multipliers. If the risk and

multiplier is reduced, then the quota should be reduced as effort

and risk is no longer proportional.”

“Sales leads mean nothing in this job… we create our own and do

not need Marketing to do it for us, as they are usually off base and its

a waste of money and time.”

“Due to the global economic environment it'd work better to have either an aggressive plan with small quotas or a conservative plan with high

quotas.”


What did sales people have to say?

“I'd like a careful balance of being able to make a lot of money when I hit big, but not having to

survive on Ramen noodles when I don't.”

“Base salary is used by the banks to determine my ability to secure a

loan, so it has disproportionate importance relative to other types of incentive… plus the taxes in my

country penalize bonuses.”

“Just as important as some of these factors is the

amount of authority the sales person has at the local

level… flexibility is critical to execution.”


What can we conclude?Hypothesis #1 – (Confirmed) – Variable incentive opportunity, followed by base pay dominated the attractors and motivators for almost all segments. Career advancement showed better than expected, especially with junior or Asian sales people. Company strength affected job selection and engagement.

Hypothesis #2 – (Mixed) – Base salary shows a marked decline in importance over a sales person’s career. TTC and accelerators show a marked increase in importance over time. Quotas and leadflow remain a tertiary consideration.

Hypothesis #3 – (Rejected) – Top performing and highly engaged sales people still care most about compensation, except in parts of Asia and Europe where career advancement and company strength matter most


Other interesting observations:While variable pay is stated as the top priority by almost all groups, most sales people currently choose base salary over other factors when presented with packages

Recognition and car allowances, often touted in sales organizations, may be prime opportunities for cost savings

Women tended to have a more balanced perspective, assessing a company’s culture, strength and benefits more than men

Half of all people surveyed viewed themselves as 90th

percentile performers… companies should harness that optimism in this economy


Additional InformationStop by our booth if you’d like more information

Elements of the Employee Value Proposition for SalesSales Compensation DesignSales Force Effectiveness

Hewitt’s Booth #909E-mail: [email protected]: 404.276.7876

mailto:[email protected]


Appendix


Composition of the SampleParticipants by Gender

Male74%

Female26%

n=940

Participants by Age

Over 601%

40 - 4929%

30 - 3947%

Under 3016%

50 - 597%

n=947

Percent of Participants Who are Engaged in Their Work

No70%

Yes30%

n=937

Participants by Performance Level

10%ile1%

25%ile2%

50%ile13%

90%ile49%

75%ile35%

n=950

Participants by Gender

Male74%

Female26%

n=940

Participants by Age

Over 601%

40 - 4929%

30 - 3947%

Under 3016%

50 - 597%

n=947

Percent of Participants Who are Engaged in Their Work

No70%

Yes30%

n=937

Participants by Performance Level

10%ile1%

25%ile2%

50%ile13%

90%ile49%

75%ile35%

n=950


Composition of the Sample

Participants by Salary as Percent of Total Income

0

50

100

150

200

250

0% 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Fixed Salary as % of Total Income

Num

ber o

f Res

pond

ents

n=942

Participants by Sales Experience

0

50

100

150

200

250

300

Lessthan2yrs

2-5yrs 5-10yrs

10-15yrs

15-20yrs

20-25yrs

Over25yrs

Years in a Sales RoleN

umbe

r of R

espo

nden

tsn=949

Participants by Salary as Percent of Total Income

0

50

100

150

200

250

0% 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Fixed Salary as % of Total Income

Num

ber o

f Res

pond

ents

n=942

Participants by Sales Experience

0

50

100

150

200

250

300

Lessthan2yrs

2-5yrs 5-10yrs

10-15yrs

15-20yrs

20-25yrs

Over25yrs

Years in a Sales RoleN

umbe

r of R

espo

nden

tsn=949


Professional Biography — Scott SandsScott Sands is a Principal and Sales Force Effectiveness Practice Leader located in Atlanta, Georgia. He works with senior executives in large, global companies to identify opportunities for revenue growth, select the proper sales channels, refine selling processes and messages for specific market segments, staff organizations with the right type and number of sales professionals, set fair but challenging goals, and design motivational incentives. He has 18 years of experience in industry and with leading professional service firms, including Briggs & Sands Consulting, Sibson Consulting, The Alexander Group, and Watson Wyatt. His recent client work includes: Fortune 1000 telecommunications, technology, pharmaceutical, insurance, banking, energy, and heavy manufacturing companies including: Adobe, Assurant, AT&T, Avaya, British Petroleum, Broadcom, Cisco, Cox Communications, CSC, Dell, Electrolux, EMC, General Electric, Intelsat, Johnson & Johnson, Merial, MetLife, National Semiconductor, Nortel, Northrop Grumman, Qwest, Roche, SonyEricsson, Sprint, Symantec, Travelers, Unisource, Verizon, VeriSign, and WellCare.

Scott is a frequent author and speaker at national conferences. His work has appeared in Workspan, Selling Power, SAMA's Velocity, and Sales & Marketing Executive Review. In 2006, he co-authored the WorldatWork's bestselling book Sales Compensation Essentials. Scott holds a bachelor's degree in Electrical Engineering and Mathematics from Vanderbilt University and a MBA with a focus in Marketing and Organization Effectiveness from The University of Texas.

Scott oversees all dedicated Sales Force Effectiveness consulting resources in North America. He coordinates with global Hewitt Talent and Organization Consulting resources to ensure that this fast-growing segment delivers proven approaches, cutting-edge insight, and client business impact.

Differentiating Employee Value Proposition for the Sales Force

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