The target pay level is the sum of money a sales person will get from both the fixed and variable parts of their salary combined. It includes all types of incentives and one off random sales contests, but does not include benefits.
The target pay is also known as the target total compensation, or total target cash.
This is a vital figure for everyone – sales people want to know what they can earn, and sales managers want to know what they will pay.
The Two Components Of The Target Pay Level
There are two parts to the target pay level:
The fixed salary. This is the amount a sales person gets on an annual basis, and is normally quoted as a gross amount. Many organizations have a flat salary structure that pays different amounts to sales staff depending on their experience and skills. Other factors that affect the fixed salary include years of service, number of contacts in the target audience, and their knowledge of the competition.
The variable salary. This is decided by the commission or bonus scheme in operation. The variable scheme follows the philosophy of the company, the particulars of the job role, and the objectives of management. The variable part can take many forms, including straight commissions, bonus schemes, a team pool, etc. Some variable salaries are created for specific roles.
The correct target pay level is an essential part of a company’s success. Every company that relies on sales needs a stable, effect sales team in order to succeed. An effective target pay level helps keep sales staff motivated, and increases staff loyalty, building a stable and reliable team.
Three Attributes Of An Effective Target Pay Level
There are three attributes that makes for an effective target pay level: