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Total Compensation Systems
You can
double the impact
of your incentive plan if you communicate an employee's long term financial
potential and establish a
performance description.
System
elements
Job
levels
- A
system of scaled job grades or levels is illustrated below. For each level, the
participant knows the role he or she must play, the expected value-added, and
the criteria for promotion. The example is for a sales force.
Similar models are prepared for management.
| Sales Force Levels |
3 |
4 |
5 |
6 |
| Role |
Representation |
Marketing Program Implementation |
Basic Account Management |
Relationship Management |
| Value - Added |
Tactical Gains |
Big Orders, New Distribution, & Milestone
Successes |
Make Significant Gains In Market Share |
Create New Value For Company & Customer |
Pay
targets - External market
survey data to develop salary ranges and incentive opportunity targets for each
level are illustrated below. We find that publishing salary range information helps participants
understand future income potential from performance.
| Sales Force Levels |
3 |
4 |
5 |
6 |
| Salary Range |
$35-45,000 |
$45-55,000 |
$55-65,000 |
$65-75,000 |
| Incentive Target |
$15% |
20% |
25% |
30% |
Performance
description - SPS prepares a one page
description of the performance expected of each participant. Employees are
asked to present their own performance reviews. The description contains:
Income
simulation - SPS prepares
simulations of each participant's financial opportunity for the year if the
business plan or sales goal is achieved. With profit sharing and phantom
stock plans, simulations cover several years to show people the financial
importance of long-term performance.
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