SELECT AND USE REVELANT SURVEYS
We find and practitioners have confirmed that the two most common problems associated with surveys are: 1) which ones to select; and, 2) what data to use. While companies typically balance survey availability against cost, the top five factors most often considered with selecting a survey are:
- Companies/industries covered (e.g., same companies used for pricing of executive jobs; direct product/service competitors; companies who use comparable sales model)
- Types of sales jobs included
- Types of data provided (compensation and sales/revenue levels)
- Data's reliability, validity and frequency of updates
- Credibility (over time) of data reported
Relative to selecting survey data for the purpose of pricing sales jobs, we advise practitioners to consider the following data guidelines:
- Type - Target preferred rather than actual pay
- Timing - Current year target preferred
- Scale - Percentile preferred over average or mean
- Elements - TCC, incentive pay, base salary, and productivity (e.g., revenue) preferred
ADJUSTMENTS
When two or more survey sources are considered for use in the job pricing process, the issue of which survey to favor is often a
challenge. With that in mind, we believe there are two types of adjustments that should be given consideration when pricing sales jobs. The first adjustment involves assigning additional emphasis (or weight) to a particular survey when blending data from two or more survey sources. For example, when a strong job match is identified in two surveys, but Survey 1 is viewed as more reliable (per the criteria described above), survey job values might be weighted 60% (Survey 1) and 40% (Survey 2). The total percentage allocation must equal 100% and, of course, results in a weighted average compensation value.
The second adjustment reflects a judgment about the degree of match between a company's sales job and the survey jobs it is compared to. For example, if a survey job is deemed to be a "light" match relative to the sales job it is matched to (e.g., the survey job is at a lower level or does not contain all of the elements of the company's sales job), then a positive adjustment factor (typically in the range of 10% to 20%) is applied. The reverse of this situation is judged to be the case, i.e., a 'heavy" match, then a negative adjustment factor or discount if applied to the survey compensation data.
SUMMING UP
The outcome of a consistently applied sales job pricing process is identified compensation levels that, when adopted, contribute to a company's ability to attract and retain the right sales talent. When one or more of the issues identified in these articles stands in the way of that result, taking the actions described in these Shorts will enable a company to get back on track with the desired result.
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