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Getting Pay Mix Right

183:906269490 • January 14, 2025

Best Practices in Sales Compensation Part 4

It’s time to talk about pay mix, one of the most challenging parts of sales compensation to get right. Before we dive in, if you haven’t read the previous posts on best practices in sales compensation, be sure to check them out:


Your Financial Due Diligence in Sales Compensation

Culture Considerations in Your Sales Organization

Job Content is Foundational in Sales Compensation


Now, once you’ve defined your role, done your market research, and determined what you can afford to pay your new salesperson, it’s time to start thinking through the pay and pay mix.

Factors that Affect Pay Mix

Pay mix refers to how you break down the total of what you can afford to pay. It’s made up of base salary, a fixed cost for your organization, and variable pay, a cost that changes based on the performance of the salesperson.


How you divide that mix is based on factors like how much you can afford, how the market compensates similar roles, the specifics of the sales function for the role you’re compensating, and your organization’s place in its maturity lifecycle.

Affordability and Market Value

Presumably, by this point, you’ve already done your research on what your company can afford to pay. You’ve also already researched the market and the “going rate” for the role you’re compensating. The information you gathered at those stages has probably painted a picture for you.


That picture may be that you can afford to pay in the mid-to-high range compared to the market. It may be that you can barely afford the low end of the spectrum. Your situation compared to the market with reference to affordability will play a part in determining how much base pay you can afford to pay and for how long without any sales productivity. It will also determine whether you need to rely on variable pay to cover a large chunk of the total target cash compensation for the role or if it can be used predominately as an incentive for higher levels of performance.

Role Specifics

Another important factor in how you divide up the pay mix is the specifics of the role you’re compensating for. How much risk is the salesperson taking? How much responsibility is on their shoulders? How specialized do you require their knowledge to be? How much control do they have over the sale? Do they own the entire sales or business development process?


For inside sales, field sales, specialist sales, and sales management, all these factors need to be considered when establishing a pay mix.


The Lifecycle of Your Business

The maturing of an organization plays a strong role in how the pay mix is divided up. For example, a younger organization may need to rely more heavily on its salespeople to educate and inform customers about their offer. They carry greater risk and potential reward (upside), especially in an organization that doesn’t have established cash flow for higher base pay.

On the other hand, a well-established organization with strong brand recognition can afford to offer a higher base salary because their salespeople don’t carry the same type of risk in selling a developing or unknown product to the market.

Best Practice for Defining Pay Mix

Consider what’s best for your organization at this moment in time. Consider what you can afford and how that affects the kind of person you can attract. Intentionally establish pay levels at a sustainable level given your current situation in the business cycle, the role, and the strategy at this time. Most of all, get comfortable changing as your business evolves because it will, and the way you compensate your sales teams should accordingly. 


I go into this topic in much more depth in my book Starting Simple: Sales Compensation if you want more information. As always, if you have any questions or want to talk about your sales comp program, don’t hesitate to reach out. 

By 183:906269490 December 16, 2024
In my first Best Practices post, I talked about the importance of knowing what you can pay for your sales roles before worrying about what the market is saying. In my second post, I covered ways to utilize culture in a sales organization . The following Best Practice in sales compensation involves job content. Job content plays several roles in your compensation plan: 1. It gives your salesperson a guide to what success looks like in their role. 2. It gives you a guide to evaluating the performance of your salesperson. 3. It rationalizes differing levels of variable pay outcomes for varying performance levels. 4. It provides your organization with the structure needed to comply with any reporting, pay transparency, or other regulations. Hopefully, that’s enough to convince you of the importance of taking the time to define your new roles and revisit the definition of your existing roles. Now, here’s how job content actually does those things. Defining the job The first role of job content is to define the who, what, where, when, and how of the function. It can be tempting to borrow a job description from LinkedIn, Glassdoor, etc., with the assumption that the content will be similar enough to fit your needs. However, the way a specific role performs is unique to the organization it’s acting in, which is why it’s important to take the time to define the job from scratch. Here are the questions you should be answering in your job content: What does the person need to do on a daily basis? How does this individual pursue sales, and in what segment or with what type of customer? Where should they focus their time and attention when building a pipeline of deals? Who should they be interfacing with, both internally and externally? When do they engage with customers and/or prospects? What portion of the sales process do they own or support? How do they interface with and influence decision-makers? Now, even though I said to write your job description from scratch, that doesn’t mean this is the time or place to get too creative. Job seekers are going to be searching by job title or category, so it’s essential to stick to the common vernacular regarding industry jargon and expected job titles. Job Description: A Byproduct of Job Content Another positive outcome of creating job content for your roles is that you will have generated much of the information needed for a job description if or when you’re ready to hire. Information such as: Job duties and responsibilities that clarify the type of work and engagement with customers. Qualifications/Requirements that are both minimum and desired. Those include education, knowledge, skills, capabilities, and competencies. Performance measures of the role include items like achieving sales targets, new logo acquisition, development of pipeline, accuracy in forecasting, etc. With all of this information on file, it will not only be easier for you to prepare to hire for the roles you want, but it will also be easier to evaluate existing employees in those roles. Beyond all of that, you’ll be well prepared for competitive market research and establishing your variable pay program. I’ll be posting more best practices on the blog, but if you’re anxious to dive deeper into the subject of sales compensation, you can grab a copy of my book Starting Simple: Sales Compensation and consider working through the companion Workbook to build a sales compensation plan from scratch.
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