Employment status and sales compensation — ‘How do I get paid?’

By: David Cichelli Sales Compensation

This year’s 2016 Sales Compensation Trends Survey takes a deep dive into discovering the impact of day-to-day employment status changes on sales compensation payments. For example, do new hires have a guarantee? And, how does sales management treat in-process orders for promoted sellers? By participating in this year’s survey (see more information below), you can learn how others treat incentive payments for different employment status changes.

The Need for Policy Clarity—Employment Status Impact on Sales Compensation Payments
On an annual basis, one-fourth of all companies have one or more sellers initiate a legal challenge regarding their incentive payment. A major category of these legal actions are “fuzzy” rules around employment status policies.

Here are the topics that need affirmative treatment as a part of the sales compensation program’s terms and conditions. These policies might vary by job title, too.

  • New Hires. Should you provide a guarantee? How long should it last? How much should it be? Should it decline over time? What type of quota should management assign to the new hire?
  • Promotions. What happens to in-process orders when a seller is promoted? Does the seller get credit for in-process orders? What sales credit is made available to the incoming replacement?
  • Lateral Transfers. If a salesperson accepts a lateral transfer, what happens to in-process orders and quota assignment?
  • Transition to a Non-Sales Job. Do sellers have any sales credit rights for in-process orders if they accept a non-sales job within the company?
  • Resignations and Involuntary Terminations. Both resignations and involuntary terminations are fraught with potential legal challenges. How do other companies treat pending incentive payments when resignations or terminations occur? Do sellers have any sales credit rights past their termination date?
  • Paid Leave of Absence. If a seller is on paid leave of absence (e.g., sick leave or sabbatical), how are sales incentive earnings treated?
  • Vacations. Are sellers paid for incoming sales when on vacation? Do companies provide a guarantee for sellers who go on vacation? Does vacation time affect quotas?
  • Open Territories. If a seller is temporarily assigned accounts for an open territory, how are they paid?

Employment status will impact incentive payments. Having clear, well-documented policies, will ensure both sellers and the company are on the same page regarding incentive earnings.

About the 2016 Sales Compensation Trends Survey
To learn about the impact of employment practices on sales compensation payments, participate in the 2016 Sales Compensation Trends Survey. Now in its 14th year, the annual Trends Survey collects trend and budget information for both 2015 and 2016 sales compensation programs. Leading companies use the Trends Survey to confirm incentive budgets, quota practices, plan design features and base pay program changes. The Survey does not gather actual or target-pay data, only program policies and budget information. Participation is free. The survey is now open and closes December 15 with results published January 8, 2016.
Click here to participate.

Learn more about Alexander Group’s Sales Compensation practice.

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David Cichelli

David Cichelli contributes his revenue growth knowledge and experience to a wide array of sales organizations. His clients include leading companies in technology, telecommunications, wholesale/distribution, financial services and healthcare. David helps clients redefine and deploy go-to-customer solutions to ensure optimal revenue performance. By applying the Alexander Group’s Revenue Growth Model™, he helps companies achieve their revenue objectives through the coordination of marketing, sales and service resources. These efforts include revenue planning, customer engagement design, sales force configuration, and program design and management. He is the Alexander Group’s sales compensation practice leader.

Widely recognized by national professional associations and trade publications for his work in linking sales compensation to management’s objectives, David is a frequent speaker on sales compensation topics. He is author of Compensating the Sales Force (3rd edition) and The Sales Growth Imperative, published by McGraw Hill. He serves a leadership role in the design of the firm’s revenue growth conceptual models. David is an officer of the company. He is also the author of the 2018 Sales Compensation Almanac, published by AGI Press.

Prior to joining the Alexander Group in 1985, David served for five years as a national practice manager in sales compensation for a leading compensation consulting firm. Previously, he had spent seven years providing support to the field sales organization of a multinational Fortune 200 chemical company. David has a B.A. from Pennsylvania State University and an M.S. from Michigan State University.