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Los Angeles. December 12, 2018
Be a Team Player, According to a Korn Ferry Sales Compensation Analysis
-- Comp Plans Shift as Sales Process Becomes More Consultative and Solution-Based --
LOS ANGELES, Dec. 12, 2018 — ‘Go Team!’ is an increasingly important mantra for sales professionals, as a more consultative and team-based selling approach is creating changes in the way they are compensated. That according to a recent Korn Ferry (NYSE: KFY) analysis of sales team compensation plans at more than 425 organizations in a wide range of industries in the United States.
The analysis found that this year, 36 percent of companies report that they take into account corporate-wide performance when determining incentive pay such as bonuses, compared to only 29 percent doing so last year. In addition, when determining individual incentive pay, the performance of the district/region is taken into account by 20 percent of the organizations, compared to 14 percent the year prior.
“The shift in how incentive compensation is calculated reflects a move toward selling solutions – not just products – which involves a team of people and creates a longer sales cycle. This means performance cannot be based solely on how an individual performs,” said Korn Ferry Senior Client Partner Marc Wallace. “While star performers who make an impact will always be rewarded, the embrace of the lone wolf mentality is waning. Sales professionals increasingly need to think team, solutions and company first.”
When it comes to elements analyzed to determine incentive pay, revenue/growth is the most common measure, with 60 percent of organizations saying they use that metric. That is up from 53 percent the year prior. Thirteen percent say they use discretionary/subjective metrics, which is up from 6 percent last year. A full 25 percent say they use other metrics not traditionally used to measure incentive pay. That’s up from 19 percent the year prior.
When asked what their greatest areas of focus are, sales teams leaders said reducing turnover, building global teams, succession planning, and leadership and culture.
“Increasingly, sales team members are being rewarded for a broader view of their market and industry, and there is less of a focus on aggressive sell tactics that may not be in the best interest of the customer,” said Wallace. “Creating a collaborative culture and environment where sales professionals have the ability to grow and learn and be rewarded for teamwork is the best way enhance retention and ultimately sales.”
The study also looked at key predictors of sales professional retention and compared employees who indicate they plan on staying two years or longer to those who say they will remain on the job less than two years.
- Nearly three-quarters (73 percent) of employees who say they plan on staying with the company for two years or more say they believe their organization is effectively managed and run well.
- Only 51 percent who plan on staying less than two years agree their organization is run well.
- Nearly two-thirds (64 percent) of those with longer expected tenure say they are confident they can achieve their career goals.
- Only 31 percent who plan to leave within two years believe they can achieve their career goals.
“It’s critical that sales leaders set clear goals and objectives for their teams and then give them the tools and resources needed to effectively develop and succeed,” said Wallace.
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.