Compensation design for a sales force should provide incentives via individual and team pay-for-performance models, says Kriss Barlow, a consultant with the Omaha, Neb.-based Corporate Health Group (CHG).
After consulting with CHG on business goals, objectives and job descriptions that emphasized accountability, the marketing team at Norfolk, Va.-based Sentara Health System crafted a compensation plan based on achieving "expectations."
Individually, salespeople receive a 1.5% of base salary bonus if sales expectations are met and 2% if they are exceeded. And the team's pay-for-performance is 5% if objectives are met.
In framing its policy, Sentara considered some core steps for compensation design developed by CHG. They include:
Analyzing the business strategy and sales role to clearly define market opportunities and requirements to meet target goals.
Establishing total pay parameters by building a conceptual budget range for total staff compensation. This figure should be fine-tuned
Determining base pay - fixed and variable pay mix, based on market range and value for the position. Because sales is not a traditional job in healthcare, providers may need to consider a variety of resources like compensation consulting firms and other intangible service-based industries like hotels, banking and financial services. Base pay ranges should be designed with a minimum range (70% of the midpoint), a midpoint range (100%) and maximum range (130%). The base pay usually comprises 50-75% of the total compensation package while the variable pay for performance, referral fees and commissions, comprises the remaining percentage.
Communicating the plan to all appropriate parties and getting administrative buy-in.
Source: Corporate Health Group