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What Data Indicates about Plan Design Elements Used to Support Sales Talent Retention

In last month’s blog post (“Design Techniques to Align Sales Compensation with a Talent Retention Strategy“), we indicated that companies consider eight (8) plan design areas when striving to align compensation with a sales force retention strategy. As a follow-up to that post, we believe it is useful to have a perspective on the prevalence of the practices companies actually use.

CSO Insight’s 6th annual (2014) Sales Compensation and Performance Management study provides such data. In a survey of over 800 companies, 47% of which have revenues greater than $50 million*, participants report the following:

Plan Design Element Used as Talent Retention Tool

  • Multiple levels of sales role – 41.3%
  • Salary as the incentive multiplier – 34.6%
  • Merit pay treatment – 32.7%
  • Quota tiers – 31.1.%
  • No performance threshold (i.e., payment from dollar one) – 29.5%
  • Consistency performance bonus (short term) – 22.5%
  • We don’t target retention (through the compensation plan) – 18.2%
  • Consistency performance bonus (long-term) – 11.3%
  • Don’t know – 5.4%

*Revenue size of companies represented by respondents were as follows: 31% < $10M; 22% $10M-$50M; 17% $51M-$250M; 13% $251M – $1B; and, 17% >$1B

** Percentages add to great than 100 because respondent were asked indicate all of the techniques used by within the compensation plan

Generally speaking, the practices reported in this survey are consistent with what we have observed in companies’ sales compensation plan designs through our consulting engagements. Two data points, however, did catch our attention: first, about a third of the respondents indicated the use of “consistency performance bonuses” (both short and long term) and we believe this practice reflects the importance of retaining sales reps who are consistently among the top performers; and, second, we were surprised that almost 20% of the respondents indicated that talent retention is not targeted through the compensation plan. This finding is difficult to explain in a time when many industries and companies are challenged with turnover, particularly when that turnover involves high performers.