I had the pleasure of attending a compensation meeting at a top 100 Canadian Employer and the topic was compensation. Over the years I have seen many different types of compensation plans and it is important to understand TI or Total Income with respect to Total Compensation. The key is ensuring that you understand the plan and that it is relevant to your career goals.
Total Income would be Salary + Commission + Bonus. Basically anything you can take home in a pay cheque or will who on your T4.
Total Compensation would be TI + benefits. Benefits may include Health benefits, Vacation or PTO (Paid Time Off), Fitness Allowance, Shares etc.
When evaluating an employment offer here are some items to take into consideration:
-Base Salary and if raises are applicable. When are raises granted (same date every year, on you anniversary date, merit based, tenure based, base lined to the inflation rate etc). Are their Salary restrictions? Reasons why Salary increases are not paid? What percentage of Sales Staff received an increase last year?
- Commission and Commission Structure. For Sales and Sales Management the devil is in the details so ask a lot of questions. Has the commission plan ever been changed mid year? Under what circumstances? What percentage of the Sales Staff/Managers are above plan and why? How is the commission structured? If you don't hit a certain threshold then will you only receive a portion of commissions? Are their accelerators? When are commissions paid? Can they claw back commissions and under what circumstances? Ask to see a commission plan and plug in some numbers to make sure the math works.
- Bonuses. Bonuses are an interesting incentive and can be applied individually, as a team or as a company. How are bonuses distributed? How are they earned? What is the criteria? Is it a personal achievement? Team Achievement? When do they get paid? Have bonuses ever been discontinued and why? How many staff (sales staff) received a bonus last year? What percentage of the full bonus they could have achieved did they actually realize?
- Opportunity to Move Up. When you read the book Good to Great, they talk about some of the most successful companies globally and how their recipe for over achievement is a result of promoting from within. The reality is that very few companies actually do promote from within. So ask. What percentage of staff were promoted cross departmentally? What percentage of staff where promoted upwardly? What percentage of management positions were filled internally vs. externally? Are their any restrictions? For example you have to be in your current position for 1 year or you can not move cross departmentally, just within your department.
- Other Perks: So what are the other perks? Fitness Allowance? Employee Shares or ownership? Paid Time Off? Health Benefits (and always ask if there is an employee portion that has to be paid), paid parking, Sales Incentive Trips, Education subsidies, Contests, Company parties etc.
How does the company you are looking at compare to their competitors in the same industry?
Now some of these benefits may or may not be relevant to you so ensure you negotiate the perks that you will use.