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Sales Compensation Management

Sales compensation trends for 2018 and beyond

By January 6, 2018June 11th, 2024No Comments

Last year flew by, and here we are in 2018. You’re probably finalizing this year’s compensation plans for sales teams. As you do so, it’s important to keep up with current compensation trends. While sales incentive programs generally don’t change radically from year to year, there are many small tweaks you can make to ensure your sales team hits quota consistently.

The U.S. economy was on the incline during 2017, and that fiscal momentum means 2018 may be an even bigger year for the nation’s economic performance. Make sure your organization can reap the benefits by creating the best incentive plan possible.

Here are some trends to watch for in the new year:

An expanding workforce
In 2017, many sales organizations increased head count. Those expansion efforts are largely the result of improved economic conditions that have enhanced buying power. In many businesses, sales are up and the economic picture is improving. These factors make further expansion in the near future likely.

“An improving economy encourages expansion.”

As a result, organizations will need to create improved compensation plans that accommodate people at every level of tenure within the organization. This can be difficult using older systems that are based around a single spreadsheet. Companies may want to invest in an updated compensation management platform that makes it easy to manage complex incentive structures that incorporate several different metrics.

More ways to compensate
Employers have traditionally awarded employees’ compensation bonuses based on sales alone, but that approach is falling out of favor. Today’s compensation plans incorporate more elements of an individual’s performance and accurate forecasting into their eventual pay.

This manifests in a variety of ways, and can extend to departments outside of sales. Manufacturing teams are rewarding employees who make substantial contributions to the company’s overall safety record and managers may be better rewarded for overall team performance with additional bonuses.

Within the sales force, the use of compensation has become smarter but also more complex. Companies now use incentives to reward sales employees for accurately forecasting their eventual sales, according to Harvard Business Review. This has huge benefits when companies estimate their annual performance, and ensures employees have reachable sales goals.

The need to control costs
Many sales groups came in above or below budget as a result of paying out more or less than anticipated in incentives. This reflects the difficulty involved in accurately anticipating sales performance. To combat this issue, companies can integrate more advanced compensation tracking and management software that allows them to collect and analyze historical data on employee sales.

This will provide greater insight into how individual employees work and help a company better distribute the workload across a sales force. Once these programs are implemented, sales people will have a better understanding of their standing relative to team sales goals.

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Ballast Point Ventures is a later-stage venture capital fund established to provide expansion capital for rapidly growing, privately owned companies in diverse industries, with a particular emphasis on companies located in Florida, the Southeast, and Texas. The BPV partners have more than 70 years of combined experience investing in and building high-growth companies in a number of industries, including healthcare, business services, communications, technology, financial services, and consumer goods. BPV has $200 million under management and seeks to make equity investments ranging from $3 million to $10 million.

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Harbert Management Corporation

Harbert Management Corporation seeks to generate superior returns for their investors by identifying and investing in the most promising early growth stage companies in the Southeastern U.S. HMC seeks to capitalize on what it believes are compelling regional dynamics, such as a strong and fast-growing economy, significant research and development activities, and an established entrepreneurial community. The HMC team combines substantial investment, advisory, and operating experience with capital and networking contacts to support great entrepreneurial teams in successfully executing their growth plans. With offices in Birmingham, Alabama; Richmond, Virginia; and Gainesville, Florida, it’s well positioned to partner with entrepreneurs throughout the Southeast.

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KBH Ventures

KBH Ventures was an early investor in Iconixx Software. KBH's investment philosophy plays a significant role in the firm's successful track record. KBH believes in running businesses to be cashflow positive and profitable every month. Startups and companies in a startup mode, such as one that has been purchased in distress, are expected to generate revenue within the first six months and reach profitability within the first 12 to 18 months. KBH also only invests in or acquires companies that are in the startup phase or have less than $20 million in revenues. KBH targets technology companies that offer business-to-business services.

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S3 Ventures is an early expansion and growth stage venture firm with $200 million under management. It’s focused on information technology solutions that solve large business problems. S3 also invests in medical devices that improve the human condition. S3 invests in category-defining opportunities. It partners with the team and help focus methodically on what it takes to build a successful company. S3 today helps talented entrepreneurs take their technology and market knowledge and form valuable businesses in a repeatable fashion. Investment sizes start at several million or more for Series A, B, and C financing.