Some fractional movement in the average rates is announced. There’s a nagging sense of dissatisfaction. Is it worth the cost to learn so little? HR leaders want to know what the competition is paying. The benchmark doesn’t really answer the question – it feels like a waste of money.
The benchmark is routinely funded in the HR budget. So the annual tradition continues. This is the year to shake things up. Competitive intelligence is the key.
This post is for HR and Sales leaders who want more. It describes how to get the competitive intelligence you really seek.
Also, sign-up for SBI’sAnnual sales workshop here. By participating in this free event at your office you will:
- Learn the best practices of the brightest sales people in our research
- Discover tactical solutions to get the most out your incentive comp dollars
Poor Compensation Drives Turnover
In today’s environment, “A” player sales talent is more informed than ever. They know the income-generating potential for their skills and experience. Decisions to stay or change jobs are based on information easily accessible online. Social media provides more insights that are increasingly influential. It’s easy for top sales talent to remain informed about how much they should expect to earn. This is the start of turnover; a very expensive problem to fix.
To compete for and retain talent, leaders must know what the market is paying. It’s essential to know reasonable salary ranges for the positions in your company. The traditional way to stay informed has been the compensation benchmark. But for sales roles, it’s not enough to know “market” conditions. Competitors can have a direct and damaging impact. Knowing the income ranges for each job description is important data. But effective compensation planning requires competitive intelligence.
Compensation Benchmark Basics
How can you tell if traditional compensation benchmark is sufficient? The benchmark is data gathered by compensation specialists from participating employers. It’s a useful guideline but does not answer the following questions:
- How much is the competition paying for sales talent?
- What is the future direction of competitive pay levels?
- How do competitors structure incentive payouts?
Market Conditions vs. Competitive Threat
The Competitive Compensation Analyzer can help. The benchmark provides data, but little insight. It describes the general market. But a sudden competitive threat can make your pay less attractive – even if market conditions remain the same. Recognizing this requires competitive intelligence – a benchmark falls short.
Think about the many ways you monitor internal performance: forecasts, pipeline reports and dashboards. Now compare this with how you monitor external industry activity. Is your outward-looking analysis as robust as your internal performance metrics? Most sales organizations lack the insight to factor competitive threats into compensation planning. Yet, the most dramatic threats and opportunities come from the outside.
Wanted: Competitive Intelligence
Competitive intelligence is more than salary data. It includes insights from sales reps, potential job candidates, sales budgets and recently departed employees. It also includes triangulating these data points into a complete picture. For most firms, this information is not readily available from internal sources. It requires dedicated evidence-gathering.
Social media is a key tool. For example, LinkedIn aids investigators in locating former employees of competitors. Research builds a network of data sources, broadening across the competitive landscape. Interviews, web research with resources like Glass Door and fact-finding all play a role. Aggregated, the investigative results provide a level of insight beyond tables and charts.
- Decide if a compensation benchmark will provide all the information your situation requires
- Determine if you need competitive intelligence to understand current and future threats
- Allocate your benchmark funds to produce the most effective insight
Start work today on future compensation plans. There’s still enough time to complete the research to make the best decisions. Compensation is the key to attracting, retaining and motiving your “A” players. They are the engine that will enable you to Make the Number next year.