What Sales Compensation Trends Are in Store for 2015?
By David J. Cichelli, Sr. Vice President, The Alexander Group, Inc.
This week while I am on vacation I am adding a Guest Blog, it should be of huge interest to the readers of this blog.
A look into the Alexander Group’s “2015 Sales Compensation Trends Survey” reveals that companies plan to offer moderate pay raises of 3 percent for sales personnel in 2015. This comes after a blowout year in 2014 with payouts increasing 7 percent over payments from the previous year, widely exceeding the 3% increase planned for 2014. Sales departments have a long history of overspending their compensation budgets. 2014 was a poster year for this practice.
Historically, projected wage inflation increases for sales personnel have remained modest since 2010. From 2011 through 2014, sales departments have projected their next year compensation payout costs to increase at a median 3 percent. Only in 2012 did the payouts match the projections. For 2011 and 2013, the payouts exceeded the estimate by 2 percent. For 2010, the payouts exceeded the estimate by 3 percent.
For 2015, we are again seeing sales departments estimate their compensation payouts to increase 3 percent. This is consistent with pay treatment for other corporate functions.
Much like the rest of the economy, most sales departments are expecting moderate sales revenue growth in 2015. Survey participants project a 7.5 percent median increase in sales for 2015.
The Survey results indicate that sales personnel hiring will be improving in 2015. Almost 65 percent of the reporting companies plan to increase headcount in 2015, the highest portion of reporting companies since 2010.
What else we can we expect to see in 2015? As the economy improves further, the demand for qualified sellers should expand. Hiring will become more difficult. If voluntary turnover increases as sellers seek improved compensation, we may begin to see an uptick in compensation inflation. The 2014 blowout might be a precursor signaling further and more generous wage increases for sales personnel in 2015.
Read more about the latest sales compensation trends, quotas, practices, costs and recognition events in the Executive Summary.
David J. Cichelli is the editor of the survey and a senior vice president with the Alexander Group. He is also the author of the best-selling book, “Compensating the Sales Force,” published by McGraw Hill, and the “2014 Sales Compensation Almanac,” published by AGI Press. He can be reached at email@example.com.