SALES STAFF
IDS publishes new research on rewarding sales staff
Rewards for sales staff are often designed and operated quite separately from those applied to other employees. A new guide by Incomes Data Services provides a valuable insight into an area renowned for a paucity of high-quality information.
According to IDS, one of the most obvious conclusions to emerge from its research is that, there is no standard approach to rewarding sales staff. Each company varies its reward structures according to market conditions, the product sold and the group of sales staff involved.
Widespread use of incentive schemes
Among the 11 companies contacted by IDS, only one did not have any specific sales incentive scheme.
Three traditional incentive approaches were used:
1. Bonus schemes — the most popular approach to incentivising sales staff, used by nine of the 11 case-study organisations. When it comes to design, bonus schemes are typically geared to individual performance, although some also use team measures (see table below).
2. Commission — only two companies (both in financial services) reported that commission payments were used in whole or in part for some sales staff.
3. Non-cash incentives — four companies operate non-cash incentives (typically holidays) for the best performing representatives.
Key findings of IDS research
Basic salary: the conventional wisdom is that reward packages for sales staff are dominated by incentives, with little attention paid to basic salaries. But most of the companies contacted by the IDS researchers paid a basic salary.
The payment of a basic salary does play an important role in the remuneration arrangements of most sales specialists. At the same time, however, the case study companies show that each organisation’ s policy on salaries varies according to circumstances. — IDS.
Base pay management: some companies had well-defined, organisation-wide grading structures based on job evaluation, while others operated different salary arrangements for different sales staff, with a heavy emphasis on market rates.
The most distinctive policy feature is the dominance of stand-alone salary structures for sales staff. In total, just under three-quarters of the firms have dedicated pay arrangements for sales staff. — IDS.
Company cars: all but two of the case-study companies provide cars to at least some of their sales staff, with Vauxhalls and BMWs the most popular models. Some organisations give their sales staff some flexibility over the choice of model they wish to have.
Bonus scheme details for sales staff in IDS case-study companies
| Company | Sector | Performance measures |
| A | Soft drinks producer | Commercial grades — individual sales targets (sales volume and profit). Management grades — company profit and performance against individual business objectives. |
| B | Life assurance and pensions | Varies from year to year. |
| C | Machinery manufacturer | Team performance based on sales revenue. |
| D | Car distribution | Guaranteed bonus. |
| E | Manufacturing | Company and individual performance — company profits determine total bonus pool distributed on basis of individual performance. |
| F | Electronic device manufacturer | Combination of business unit profitability and individual performance. |
| G | Pharmaceutical manufacturer | Sales staff — individual performance based employee’ s contribution to company sales growth. Regional managers — performance of their teams. |
| H | IT hardware producer and services provider | Individual performance including operating margin or sales revenue objectives. |
| I | Licensed drinks producer | Team-based with awards from the pool paid on basis of three elements: regional performance, business unit and customer grouping. |
| J | Life insurance, pensions and financial services | Individual performance based on annual premium production of new business and achievement of annual sales targets. |
| K | Synthetics manufacture | Individual performance using sales targets. |
Source: adapted from IDS Management Pay Review, Research File 54, August 2000.
Want to know more?
Title: Rewarding sales staff 2000 , IDS Management Pay Review Research File 54, August 2000.
Methodology: IDS collected information on pay arrangements for sales staff from 11 (unnamed) companies. The report contains case studies for each organisation, covering: reporting structure salary setting pay review arrangements bonus details benefits and company cars. Supplemented with salary information from 200 job advertisements for sales staff.
Survey sample: the companies were spread across all sectors of the economy, from drink manufacture to finance. The size of salesforce ranged from nine to 444.
Availability: contact the customer services manager at Incomes Data Services in London, tel: 020 7250 3434, or for editorial queries contact the editor stevet@incomesdata.co.uk
The contents of the most recent issue of IDS Management Pay Review can be found on the management pay page of the IDS web site. Jump to . . . www.incomesdata.co.uk