Pay Problem for Sales Teams: Korn Ferry Survey Shows Compensation is the Biggest Turnover Issue, Yet Nearly One-Quarter of Companies Not Offering Increases
Los Angeles. July 24, 2018
Editor’s Note: Survey Results at End of Release
LOS ANGELES, July 24, 2018 — A new Korn Ferry (NYSE:KFY) survey of leaders of sales teams across several industries shows that even though the leaders cite base pay as the top reason for turnover, nearly a quarter (22 percent) say they do not plan to increase total compensation for their team members in 2018.
According to the survey, “recruiting and retaining top talent” is one of the top three priorities for the sales leaders, along with “effectively going to market through channels, coverage and territory alignment” and “segmenting customers to align customer need/value with sales roles.”
“Clearly pay is a top issue for sales team members, and organizations that don’t regularly review their compensation models against their competitive set and adjust accordingly will lose top talent,” said Korn Ferry Senior Client Partner Joe DiMisa.
Turnover (voluntary and involuntary) of sales team members does appear to be an issue, with 30 percent saying they will lose roughly 10-20 percent of their staff, 15 percent saying they will lose between 20 and 30 percent of their staff, and 10 percent saying they will lose more than 30 percent of their staff due to turnover.
Nearly three quarters of respondents (74 percent) say revenue growth is their top financial priority, ahead of market share and volume growth (14 percent); margin improvement (9 percent) and expense reduction (3 percent).
“Experienced sales professionals are the key to increasing revenue because they are better able to relate to their customers’ needs,” said DiMisa. “Creating competitive pay packages, offering development opportunities, and living out organizational values will help keep those professionals on the payrolls of their current employer.”
About the Survey
The 2018 Sales Strategy Survey was completed by sales team leaders at 128 companies across five industries (consumer, financial, industrial, life sciences/healthcare, technology) in March 2018.
Survey Results (note: due to rounding numbers may not equal 100)
How much do you plan to increase total compensation in 2018?
Not at all - 22 percent
0.1-1.9 percent - 11 percent
2-4.9 percent - 46 percent
5-9.9 percent - 16 percent
10 percent or more - 5 percent
If you are seeing an increase in pay this year, how much comes from variable targets instead of base pay?
None - 37 percent
25 percent or less - 26 percent
Between 26 and 49 percent - 10 percent
50 percent - 7 percent
More than 50 percent - 7 percent
Greater than 75 percent - 13 percent
For your sales teams, what is the average turnover rate (voluntary and involuntary) Annually?
Less than 10 percent - 45 percent
10-19.9 percent - 30 percent
20-29.9 percent - 15 percent
30 percent or more - 10 percent
What is the top reason for turnover of your sales teams? (1 is top reason)
1. Higher base pay
2. Greater career development
3. Increased incentive pay
4. More attainable quotas
5. Stronger company affiliation
6. More stock options/grants
7. Improved benefits
8. Better work content
9. More flexible schedule
What is your organization’s top financial priority for 2018?
Revenue growth - 74 percent
Market share and volume growth - 14 percent
Margin improvement - 9 percent
Expense reduction - 3 percent
What are the top five priorities for your sales teams? (1 is most important)
1. More effectively going to market through channels, coverage, and territory alignment
2. Segmenting customers to align customer need / value with sales roles
3. Recruiting and retaining top talent
4. Better understanding / serving global and key accounts
5. Growing and supporting channel partners
About Korn Ferry
Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people.