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Solid sales effectiveness metrics are crucial for pay for performance

By October 17, 2017January 16th, 2023No Comments

When employees do not feel like their value at a company is reflected in their compensation, they may look for other higher paying positions. As an important part of employee management, companies need to be able to connect compensation with performance because as the job market heats up, it becomes more important to keep talented staff by offering them pay that matches their profitable performance levels. However, there are mistakes employers can make when it comes to pay for performance, and one of the biggest is not having solid metrics that prevent companies from giving star workers too little compensation or providing ineffective workers with too much.

About one-third of companies in the U.S. said compensation aligned with performance or productivity objectives, according to a survey by employment agency & recruitment firm Kelly Services.

The survey revealed this number could grow as 40 percent of respondents who said their companies lacked pay for performance programs said they could increase their productivity if their earnings were comparable to their performance.

With the role of incentive compensation expanding to increase retention rates and employee engagement, employers should watch out for signs that employees are not satisfied with their current pay level and incentives. The survey found about 4 in 10 employees said their current pay is fair.

“Performance-based incentive plans can be a win-win situation,” Steve Armstrong, senior vice president and general manager of U.S. operations for Kelly Services, said in a statement. “Employees can benefit from the opportunity to work smarter and raise their earnings capacity, while employers benefit from increased productivity and a more engaged workforce.”

Importance of staying focused with performance metrics
Incentive pay is often standard in sales with 68 percent of sales firms saying they offered performance-based pay, according to the survey. In order for pay for performance to have the most impact at encouraging positive outcomes and ensuring businesses are one step closer toward their goals, companies need to accurately measure key sales performance metrics.

Companies regularly use pay for performance when determining the compensation for CEOs, connecting CEO pay to the outcomes detailed in annual financial reports. However, companies that lack focus may find themselves underperforming compared to competitors, according to The New York Times. Businesses should be able to create metrics based on their business goals and desired outcomes and stick to these key performance indicators to make sure all staff at the company – from the top executives down to the main workforce – are on track for success.

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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 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 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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