Is It OK for Reps to Make More than Their Managers?

Can reps make more than their managers? Yes, it’s fairly common, says DiMisa, and, in most companies, there’s no limit as long as reps are selling the right products to the right customers.  A recent survey by Sibson Consulting found the following:

• 19% said reps can make more than the CEO.
• 48% said the reps can make more than the head of sales.
• 82% of companies said sales reps can make more than their managers!

However, this factor is highly industry dependent, says DiMisa, who is senior vice president, Sales Force Effectiveness, at Sibson Consulting, and author of the best-selling business book, The Fisherman’s Guide to Selling.

For example, DiMisa says, you don’t see this overlapping of rep and managers compensation in software or high tech because those execs are highly paid and whatever the rep sells, they get a piece of it.

DiMisa’s tips came during a recent webinar sponsored by BLR and HR Hero.

Sign-On Bonuses

Are organizations using sign-on bonuses to attract the best talent? According to Sibson research, says DiMisa, of the organizations that plan to hire new personnel, only 13% plan to use or are using sign-on bonuses this year.

The typical response is: “We don’t need them anymore. Top sales people need jobs too.” DiMisa says that companies that regularly use sign-on bonuses state that:

• The bonus range is usually 5% to 20% of the salary.
• A 15% bonus was the most selected sign-on bonus percentage.
• Average dollar amount is $10K to $15K for 7 to 10-year sales reps.

Note: Of the companies that are not using sign-on bonuses, 34% stated that they will use longer nonrecoverable draws as a sign-on incentive.

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Hierarchy of Performance Measures

DiMisa offers the following hierarchy for performance measurement, with financial results the highest measure and judgment the lowest.

DiMisa adds that performance measures should meet three criteria:

In addition, he says, typically, the percentages of total compensation allocated to the different levels in the hierarchy are different. Revenue typically represents the greatest percentage of pay at risk, and weightings vary for other performance measures and metrics, as shown below.

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