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NOVEMBER 9, 2000

SMART ANSWERS
By Karen E. Klein

Puzzling Out a Sales-Commission Structure
Consultants' data and personal research (the cheaper option) can help solve the mystery of how to pay sales staff


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Q: My small Internet startup would like to review some surveys regarding sales-commission structures so we can develop a model for our company. I have looked at various Web sites, but they don't provide this information. Any suggestions will be appreciated.

---- Rachel J. Asa, Oakland, Calif.
A: Many companies participate in annual or semiannual salary, benefits, and sales-commission surveys that are conducted by large consulting outfits and human-relations agencies. They sell the data to HR managers and other companies within their industry or in related sectors to be used as a benchmarking tool.

You can purchase the information from several private companies, most of which make their data downloadable off their Web sites. Some of the sellers include: Radford Surveys, a division of AON Consulting; Towers Perrin, a global management-consulting firm that publishes benefits and compensation studies; and Western Management Group, which specializes in conducting compensation surveys. Do an Internet search on this topic, and you should be able to find several other outfits offering similar material, so you can do some price comparisons.

WIDE PRICE RANGES.  Several of the companies, including Western Management, break their info down and package it in different versions carrying different price tags. Published surveys cost roughly from $400 to $3,000, varying widely with industry, scope of the survey, level of detail, and the ability to do a comparative analysis between the report and your company's compensation information. Many sellers allow you a sample preview of the survey format you're interested in so you can decide whether it includes the numbers you need. If your company is in an industry that's extremely new, no published surveys may be available yet, says David Cichelli, senior vice-president of the Alexander Group, a Scottsdale (Ariz.) sales and management consultancy. Then, you may want to commission a custom survey on your industry. "We have done a ton of pay-practices surveys in the dot-com area," Cichelli says, "particularly in the high-end software and computer-networking arenas." Custom data do not come cheap, however. A specially commissioned survey will run from $30,000 to $60,000. You may want to think about ordering the data in conjunction with some other businesses that are also desperate for benchmarking tools. Cichelli says such cooperative ordering isn't unusual.

LEG WORK.  If you don't want to pay for surveys, you'll have to rely on your own investigative work -- asking job applicants, HR managers, recruiters, and managers within your industry what they're paying and what they've heard on the grapevine about other companies' offers. Not exactly scientific, but you can probably get a general idea by talking to some well-connected people.

Alexander Group and many similar consultancies offer day-long seminars and ongoing training on HR topics, including developing sales-compensation programs that include base salary, straight commission, and combination plans, along with variable incentives.


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