This I did not know - from a Pioneer Press short Q&A article (my editing):

My company has a new district manager. He and I got off to a bad start when he divulged my salary in a mass e-mail and caused an uproar among my new co-workers. Some of them do the same job as me but make considerably less. When I called him on this, he responded, “What’s the big deal? They all tell each other anyway.”

A: Even though the manager showed poor judgment, he didn’t break the law, according to Richard Kass, a partner at Bond, Schoeneck & King in Manhattan. “Employees have no right to privacy in their salaries,” Kass said. The manager may have “acted stupidly,” he said, but he did not break any laws.

To take it one step further:

Your situation is unusual and is the inverse of a situation that actually is illegal. Companies typically get into trouble for directing employees to keep their salaries secret and then trying to punish those who exchange salary information, Kass said.

I’m a bit surprised by that fact.  It may be legal, but the manager sharing that information sure seems like a morale-killer.  He may have unwittingly opened a Pandora’s box.

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My wife once took classes to become a court reporter.  She even bought her own stenograph (is that what they are called?) for the training.  Unfortunately, she never completed the training due to other circumstances.

Unfortunate because court reporters earn an average salary of $59,970.

CNN.com reports this number in their article Five surprising salaries:

Surprising salary: $59,970*. You might not have thought typing could earn you so much money, but once you realize court reporters can’t miss a word — often in fast-talking situations — it makes more sense.

Here is the other end of the surprising salaries spectrum:

Surprising salary: $27,070. Seeing as paramedics have high stress jobs that require them to be on call and ready to save lives at a moment’s notice, you might expect their mean annual salary to be higher.

*Mean annual salary information based on data from the Bureau of Labor Statistics (BLS).

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Commission-only sales plans are risky in my opinion.  I know they are the truest form of selling - you eat what you kill.  I simply think that many salespeople view this structure as a lack of commitment from the company.  I’m not saying that is accurate, but I have talked to many salespeople under these plans and this is their perception.

Fortune Small Business discusses this topic in their article Why to be wary of commission-only sales staff:

“If you hire someone and you’re not really willing to invest time and resources in them - and that’s really what a commission-only sales person suggests - then you’re missing an opportunity,” he says.

Good sales people communicate to prospects whatever makes your company special.

Again, the investment (or lack of) is the issue here.

“With the high churn rate of commission-only sales people, providing a position where there’s an equitable base and a reasonable expectation to succeed is probably less expensive in the long run,” she says.

Commission-only sales people who are just in it for the money “are the ones who will bail out first if hard times hit,” says Ross.

I’ve seen them leave before hard times hit.  The retention factor for these comp plans is minimal.  We have encountered sales comp plans that swung too far to the other extreme.  Those salary-intensive plans can create an entire set of problems themselves.  In the end, I am a proponent of a plan that blends salary with a commission.

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How is that for a title?  Before I get flamed on this topic, let me pull some excerpts from a Human Resource Executive Online article (emphasis mine):

A recent study conducted by DolmatConnell & Partners debunks the myth of runaway executive pay. The findings of the study tell a much different story than what the media has heralded — instead of out-of-control CEO pay, the study shows that CEO pay rises and falls with company financials.

…

The study looked at compensation of CEOs in The Dow Jones Industrial Average over the past 10 years in relation to company financials, such as revenue, market capitalization and total shareholder return.

It reveals that total CEO pay has grown at an annual compounded rate of 15.1 percent over the past 10 years, while compounded total shareholder return has grown 12.1 percent over the same period.

Individual components of CEO pay are equally as related to certain financial metrics and show the same rise and fall with financial performance.

For example, base salaries are strongly linked to revenues because base salaries are the element of CEO compensation that is paid for shouldering responsibilities that generally increase with company size, and revenues are the primary indicator of company size.

The study found that although the salaries of CEOs from the Dow companies have increased at an average annual rate of 9.6 percent over the past 10 years, revenues have increased at an average annual rate that is approximately 50 percent greater — at 14.7 percent per year.

Now how can this be when we have watched the mainstream media perform a witch hunt on CEO compensation over the past 1-2 years?  Here are the two pull quotes in my opinion:

These finding illustrates the larger trend in DJIA companies: Base salary increases have been accompanied by revenue growth, showing a pay-for-performance relationship.

and

So, instead of gratuitously handing out large equity grants to CEOs, companies are carefully assessing CEO performance as related to company performance to ensure that shareholder interests are appropriately addressed.

You can read the entire analysis in regards to short-term incentives, long-term incentives and other aspects of CEO compensation.  You are going to find the same answers as here.

In case my position on this topic isn’t clear, I’ll reference a post from 13 months ago - The Underpaid CEO.

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Now this is a provocative article from BusinessWeek.com titled Defining A Job.  The article is quite thorough in it’s reasoning and well worth the read.  But let’s start with this explanation:

In a nutshell: how do you define a job? For most organizations today, it’s based on the unit of time—40 hours week, for example—but I believe that definition is rapidly reaching the end of its useful life. Going forward, many jobs in our economy will be better defined by and compensated according to the task performed, regardless of the time spent achieving the desired outcome.

Ironically, the switch from time to task takes us back to the way most workers were compensated for centuries. In both agricultural and craft-based economies, rewards were directly related to output created: the amount of farm produce, the number and quality of pottery pieces, and so on. Even in the early days of the industrial revolution, workers were paid by individual piece rates, in most cases with no guaranteed base pay. As late as 1920, 80% of all workers in the U.S. were paid on a piecemeal basis or in some other way that linked pay directly to the quantity of results produced.

This approach is no revelation to those of us from the sales world.  The purest form of selling is straight commission.  As we say, “you eat what you kill.”  The thought of switching to a performance-based compensation structure makes complete sense to me due to my sales focus.  But here is a well-worded explanation from a macro perspective:

The majority of workers of the western world are now employed in service industries—and already more than half of those are knowledge workers, paid for writing, analyzing, advising, counting, designing, researching—and countless related functions, including capturing, organizing, and providing access to knowledge used by others. Time-based jobs make little sense for these workers. Who’s to say how long it will take an individual to write a report, conduct an analysis, or produce a piece of software? Why not specify the outcomes that each individual is responsible for producing, and let each knowledge worker determine how much time is required to do the job well? Task-based makes sense in a knowledge economy.

And the reality is, many corporations are there already—but just haven’t acknowledged it. The move to telecommuting is essentially trusting that the task will be accomplished, although in most cases the job is still stated in terms of an expectation to work a specified number of hours from home. As virtual work continues to spread, the logic of confronting this slight of hand, of making the stated expectation fit the operational reality, grows.

Brilliant.  I couldn’t agree more with the author.

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Salespeople are motivated by many factors, but the primary, most common motivation is Utilitarianism.  The drive is for a return on investment.  Most people first think of money which is a good example, but it is bigger than that.  It involves a return on time, effort, energy, resources, etc.  72% of the top salespeople in any market or company are motivated by Utilitarianism.

Now imagine a salesforce that is not compensated in some manner by commission - a group with a strong Social motivation.  You would then have this story from the Boston Globe - A noncommissioned sales force? You’re crazy:

What is it that Little, vice president of sales for the semiconductor company Microchip, says to prospects that makes them stare at him with incredulity? He tells them that his sales force does not work on commissions. He tells them: “We are the only noncommissioned sales force in the industry. We are here to serve, to help customers solve problems.”

This VP claims it has worked for his team.  I’m a Utilitarian myself and struggle with this entire concept.  Obviously helping customers solve problems is mission critical, but what about prospects?

Little replied: “The normal sales call has the customer mind-set of, ‘Tell me about your product, give me your lowest price and go away.’ We break down that wall. Once the customers understand that we really are there to serve, they start asking for our advice and our expertise. We become part of their planning process - what are we working on five years out?”

Again, I struggle with this approach.  The discussion focuses around customers, but what of prospects?  There are many prospects out there who would enjoy a salesperson who walks in and shares his or her advice and expertise for free.

What about the size of the opportunity?  If I am a salary-only salesperson, where is my motivation to close a large opportunity that is going to require more work than a smaller, simpler opportunity?  We saw this effect first-hand at a previous customer that had a heavily-loaded salary plan (with some commission).  That sales team was simply the most unmotivated group of salespeople I have ever seen.  They were indifferent to losing an opportunity since it was of little material cost to them.  I realize there are more factors at work than just compensation (sales management, culture, etc.), but it was the weakest team we have ever assessed.

But Little explains part of the success this way:

“We don’t have to waste time on the games,” he said. “My peers spend 40 percent of their time on figuring out how and what to pay, on arguing who gets paid or what.” And it isn’t just sales managers’ time spent on the games, of course: Add in all the time typical salespeople spend calculating commissions, plotting how to get credit for sales and checking the reports from headquarters to make sure they got everything they were entitled to.

In fact, if you’ve been a salesman, or worked around them, just think of the time spent daydreaming about commissions, sitting with the calculator and working out, “If I sold X Company Y amount, that would mean I’d get Z.” Take that time, convert it to helping customers, and you’d see a transformation in the profession.

It sounds like Little is a successful VP so I give him credit for that, but I just can’t buy into this approach.

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There is an effect we have noticed when recruiting salespeople from larger companies that seems to be consistent across markets.  Some salespeople, maybe many, lose their edge when it comes to prospecting when they land a large customer.  I see this effect happening in larger companies, for some reason, more than smaller companies.

I bring this up because I read an employment ad for a large company that we used to work with in a previous life.  This company has an unbelievably strong customer service orientation.  I mean that in a negative way.  Their “hunter” salespeople believe they can service their way to a sale.  This approach is reinforced by a team of customer service people assigned to every account.

Recently, this company has seen it’s long-standing market share evaporate under pressure from an aggressive, sales-oriented competitor.  The competitor is taking this company out in their strongest regions.

The main thrust behind the competitor’s success is the sales team’s inability to close new customers in a competitive situation.  This company has a well-established name that has allowed it to hide the gross inadequacies that have solidified within their sales department.  In essence, the long-tenured sales team’s skills have been dulled by success.

I’ve seen this phenomenon in other large companies also.  I don’t have any market research to prove this effect - my thesis is purely anecdotal.  The salespeople become complacent with their existing customers and compensation and ratchet down the prospecting.  Once an aggressive competitor emerges, the salespeople are almost helpless to react.

Be wary when talking to sales candidates from these companies.  Ask them about recent customers they have closed and look for complacency in their business development.

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Every year we find December to be a fertile time for sourcing salespeople.  One of the biggest reasons - the upcoming year’s compensation plan.  More specifically, new commission plans tied to new quotas.  The salespeople receive the new plan and are, well, disgruntled.  Or ticked off.

Good salespeople tend to look outside for new opportunities when their commission plan gets over-adjusted following a strong year.  Let me speak clearly here - I am all for raising the bar, but you do have to take all factors into account before setting the new targets.

ManageSmarter.com offers up this article - Fast Track Your 2008 Sales Compensation Plans - with 10 tips for streamlining your comp plans.  Point number 1 is crucial (emphasis mine):

1. Keep it simple.
A straightforward plan makes it easy for reps to see how they’ll be paid. Don’t confuse and demotivate your reps with plans that try to do too many things. A plan is considered too complex if there are more than three to four performance metrics in the plan, or 10 or more conditions exist to determine credit allocation and payment release. Complex plans are hard to administer and maintain: They make it difficult to set up plans, to generate accurate results, and to timely respond to inquiries and disputes from sales reps. This can cause significant payee satisfaction issues.

I see that rule broken more times than you can count.  I’ve been a sales rep under a complex plan where we had to have multiple meetings at the end of each quarter to reconcile the amount.  My sales manager and I would spend multiple 30 min. meetings going back and forth on our “interpretation” of the plan and the commission owed.

The adverse side effect was the fact that even though I was making very good money, I was frustrated by the quarterly battle I encountered.  I usually felt like I had been slighted even with the sizeable check.  Talk about demotivating.

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No surprise here but the Career News is reporting that candidates are negotiating for higher starting salaries in this current market (emphasis mine): 

Job candidates are more apt to ask for higher starting salaries this coming year, and companies may have to up the ante to attract them. That’s according to an annual study on employment and compensation trends by Robert Half International (RHI) and CareerBuilder.com titled The (EDGE) Report.

Fifty-seven percent of hiring managers polled for the project said it was difficult to find qualified candidates 12 months ago; 91 percent said recruiting is equally or more challenging today. More than half (52 percent) of hiring managers who are having trouble recruiting cited a shortage of qualified professionals.

As the competition for skilled labor has become more pronounced, 58 percent of workers polled said they are more likely to negotiate a better compensation package today than 12 months ago - double the number from last year’s poll.

We are seeing this negotiating approach in our day-to-day activities also.  Candidates know it is a tight market and they have other opportunities.  Keep this fact in mind if you are entering an offer discussion with a top candidate.

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You know, I have had fourth quarters where I was tanking on my commission plan.  Yet, I never thought of this idea to make up for it:

A bank teller in Clearwater had a million reasons not to open an account for an Augusta, Ga., man Monday, authorities said. Alexander D. Smith, 31, was charged with disorderly conduct and two counts of forgery after he walked into the bank and tried to open an account by depositing a fake $1 million bill, said Aiken County Sheriff’s spokesman Lt. Michael Frank.

Fantastic.  My favorite line from the article is the last one:

The federal government has never printed a million-dollar bill, Frank said.

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