Restitution for a Rainmaker
The last sales compensation figures we ran (in August 1992) got at least one reader into hot water. A small Rochester, N.Y., company -- which will go unnamed -- was "found guilty" of grossly underpaying its sales-and-marketing manager.
The story came to light when the co-owner called Inc., confiding that his top sales staffer had seen the figures we'd run and wasn't happy. He agreed to give the salesman a 50% hike in base salary. Was the company taken for a ride? "I don't think so, based on our man's track record," says the owner. (We'll call him Murphy.) "Sales were up again, 17% last year."
Murphy had not accepted at face value the figures we'd printed. He'd done some sleuthing of his own. Establishing a benchmark was tricky because his company had few direct competitors, although one salary figure was gleaned from a rival's former salesman. He also polled New York companies of various sizes.
The results were added to the published data, and an average was calculated. Murphy had no excuses. His sales manager "was three years into the job, and his base salary was too low." The decision: up the base by 50%, but tie 25% of the total compensation package to sales targets and management's goal for return on investment.
When salary-review time rolled around this year, Murphy was sitting pretty. Another local poll, plus data from a regional manufacturers' association, suggested that the sales-and-marketing chief was well paid.* * *