Ask the MSPmentor: Tina Gravel on Compensation Models
Channel Futures and the MSP 501 initiative recently launched a new program, the 501er Community. This community is designed to engage MSPs in a dialogue about best practices stemming from the MSP 501 data, as well as provide networking events and educational opportunities.
As part of this program, we have engaged more than a dozen industry leaders as MSPmentors. These influencers include analysts, channel chiefs and renowned consultants. In this series, we present questions posed in the 501er Community discussion group and ask our Mentors to provide detailed answers.
Today, in our inaugural Ask the MSPmentor Q&A, we get thought leadership from Tina Gravel, global senior VP of channels at IT infrastructure provider Cyxtera.
501er Community: What are some best practices around employee compensation strategies and models, especially for sales and technical personnel?
Tina Gravel: Compensation models have largely gone unchanged in the last 10 years and personally, I am glad.
For a very long time now, compensation around sales and sales engineers has not changed radically. Let me start with the internal models first: As a vendor, I need to be competitive in order to hire the right folks for the job. To do this, Cyxtera HR did research (and continually does this) to understand what the range of payment for salary and commission/bonus the “A” players would require. We know we won’t have 100% “A” players, so we have ranges to allow for varying experience levels and indexing related to location for each position, along with variable compensation, etc. Most large companies do this to some extent or another.
Smaller firms often rely on what the larger firms are doing as their guidepost, at times offering lower salaries because that is all they can afford. However, many startups will endeavor to set up compensation that allows them to pay more as a percentage of sales for three reasons:
- They know the salaries are not competitive, and they will have to find another way to keep the individual in the seat.
- Smaller firms that cannot risk paying a big salary to a performer for a year (who may not perform) can pay someone more when the sale closes and the money is in hand.
- Most firms acknowledge that a small firm’s lack of brand may make it harder to sell their products and services, and so they must pay accordingly.
Most vendor, large company sales positions are either 50/50 salary and commission or some variation of the percentage depending on the product being sold, the experience level of the salesperson, whether the salesperson is a “farmer,” “hunter” or manager, and so forth.
Sales engineers are handled differently. Normally, sales engineers do not want to take on the same level of variable compensation that salespeople have an appetite for. They often want to earn a bonus for their efforts but do not want to have their salaries at risk. They also often command a higher salary than a salesperson because of market conditions related to the technical…