Compensating Sales Jobs
Many professional firms are starting to hire business developers (a.k.a. sales people). The trend is so big that a convention for legal sales people will be held in Boston on June 13-15: LSSO's annual "Raindance" conference. And I know from my own experience consulting for law, accounting and consulting firms, that they want to add business development to their marketing efforts.
The hangup every time in creating a sales position is "how do we compensate the sales person?" I know of a business developer for a 10-person California law firm who is paid $150,000 plus a 10% bonus. Most professional firms would choke on paying that much. Often the partners' annual draw isn't that high.
I found on Harry Joiner's blog "Proven Ways to Get New Customers" a link to an excellent 8-page PDF that provides the answers. Entitled "Determining the Right Salary / Incentive Ratio for Your Sales Jobs," the article is written by sales compensation experts Jerry Colletti and Mary Fiss, authors of Compensating New Sales Roles.
Click here to download Compensating Sales Jobs.
Click here to download the Worksheet "Factors Determining the Salary/Incentive Ratio"
The article reveals that the average compensation package is 70% salary, 30% bonus. But if the business developer has a significant influence on the client's buying decision, you should increase the bonus to a 50/50% mix. Conversely, if the sales person in only one of many factors affecting the buying decision, a package with a 90/10% ratio is appropriate.
The article even goes so far as to analyze what personality types fit best given the nature and compensation of different sales jobs. Recruiter Harry Joiner says the article is as good as anything you'll read in the Harvard Business Review.
