SALARY SURVEY 2008
|
The third annual Incentive Practices Research study, conducted by ZS Associates, finds that an increasing number of life science companies, including medical device manufacturers, are favoring quota-based compensation plans over ranking plans. Ranking plans pay sales representatives and managers based on how they performed compared with their peers. These plans thrived during the late 1990s as a way of managing compensation costs, but have steadily declined in popularity. According to the study, 85% of medical device companies surveyed use quota-based plans, while 21% use ranking plans. Other key findings:
- Half of all medical products companies (51%) surveyed adjust incentive plans when national sales fall below expectations.
- Approximately 11–17% of medical device salespeople win the company’s annual recognition plan award.
- Total turnover is approximately 15%, with involuntary turnover at 3%.
- Sales force incentive compensation costs are approximately 3% of revenue; total sales force compensation costs are approximately 7% of revenue.
- Most medical device companies do not use caps or decelerators as part of their incentive plans.
Stephen Redden, principal and leader of the Incentive Compensation Practice at ZS Associates, advises executives to deploy ranking plans cautiously, because they can promote unproductive competition between salespeople. The survey also indicates that quota-setting fairness is one of the most pressing concerns across all industries. For more information, go to www.zsassociates.com.
