The pandemic-driven change in the market has sparked a transformation of the work environment, too. The “great resignation” in the aftermath of the pandemic put the spotlight back on pay disparities and the seething discontent. With millions leaving in search of greener pastures, companies had to tweak offerings to attract fresh talents and retain the existing ones.
Among one of the best employers in terms of pay packages, the finance industry has long been a thriving sector. Here, the already high pay packages are boosted by annual bonuses linked to the company’s performance.
However, the change in air has started wafting through this sector, too. Many a finance major has started re-evaluating its priorities and rethinking its strategies based on the realization that high-quality compensation and inventive incentive plans are critical to retaining and attracting talents.
The trend since the pandemic has been to lean towards long-term incentives. While long-term incentives have been prevalent in finance companies, the last two years have seen lower-level employees, too, being brought under its ambit, a 2020 survey by WTW (Willis Towers Watson) claims.
To set up an effective compensation structure, it is important to understand the different kinds of pay and how to use them to your sales staff’s advantage.
Understanding the 5 ingredients of the right compensation package
1. Base Pay
This is the regular salary that sales professionals earn. Base pay is a fixed amount the employees get regardless of their performance. Salary adjustments based on annual performances are the norm with this kind of pay.
Commissions make up the bulk of a sales rep’s payments. They are formula-based and depend on the deals a representative clinch. In simple terms, the employee gets a small percentage of the revenue they generate through sales.
In the sales spectrum, bonuses make up a significant chunk of an employee’s salary. Bonus payouts depend on a variety of factors, such as the company’s performance, profit, market trends, etc.
There are a few sales positions for which there is no base pay. These tend to be reserved for the inexperienced sales staff. Instead, a “draw” or a fixed paycheck that is not dissimilar to the base pay is handed out. The caveat here is that the draw works like an advance on sales commissions, so the representative must balance out the draw with commissions over time.
5. Discretionary Bonus
Spot incentives are a great way to boost the morale of the sales team. Often, unplanned bonuses are given out as rewards for achievements.
Compensation plans also depend on the type of financial institution:
Working as intermediaries in complex businesses or industry-wide transactions, commissions can run up to millions for sales reps.
Working on behalf of companies or individuals in securities transactions, agents can draw commissions for selling mutual funds, stocks, bonds, etc.
Retail and Commercial Banks
Agents can earn commissions by selling services like accounts, loans, deposits, credit cards, etc., on behalf of the banks.
Agents earn commissions by selling different kinds of insurance plans to companies or individuals.
Proactively addressing this compensation and benefits issue helps financial companies better manage sales. The effective running of a sales team warrants the need for a well-organized and systemized sales commission tracking software.
The finance industry is replete with compensation plans and strategies. A commission tracking software will give both the sales representative and the company complete visibility of the complex sales commission process. The ability to automate, manage, and track commissions help manage complex compensation plans with accuracy, timeliness, and ease.
Contact Blitz today for a free demo on how to transform your company’s compensation blueprints.