Is Your Manager Messing With Your Comp Plan?

As a sales professional, you’re expected to deliver results with consistency, and when you do that it’s fair to expect that same consistency in your compensation. When was the last time the details of your comp plan were changed? Does it happen every year, with wild variations? More often than every year?

How do you assess your own value to the company to better insulate yourself from capricious changes from management? Consider this approach:

You’re a business. Change your mindset from that of an employee to an independent small business within the larger business you work for. Take a cold, hard look at your full cost to the company – don’t forget benefits – and consider whether you’re delivering 5 to 10 times that amount in revenue. If you are, there’s some solid ammunition to state your case against the trimming of your compensation.

Profits. Beyond top-line revenue, take a look at how much gross profit the Small Business of You is delivering to your employer. For example, suppose you’re responsible for $1.5MM in annual sales revenue at a 40 percent margin. That’s $600,000 in gross profit for the year. Your total earnings should be around 25% of that gross profit – including your base plus commission. So $125,000 or so feels right. If you are selling service or other contracts over a term that are repeatable for the company, the numbers could be higher.

Off the treadmill. Yes, it’s fair for management to incentivize a salesperson by setting “stretch goals.” But if you’re delivering the kind of consistent results discussed here and never reach the goal line because it keeps being moved, it’s time for a talk. Keep emotion out of it and review your value to the company as your own small business. If that doesn’t stop the shifting sands of unpredictable compensation, it may be time to seek greener pastures.