European Bonus & Sales Compensation Survey 2014€¦ · 3 In this report we present the results of...

European Bonus & Sales Compensation Survey 2014

3

In this report we present the results of the Aon Hewitt European Bonus & Sales Compensation Survey 2014. The survey was conducted in Q1 of 2014, and it covers data for 15 countries across Europe.

This year we have consolidated the results of our Variable Compensation Measurement and Sales Compensation surveys into one single report providing you with greater coverage and more insights on the key trends and developments affecting both areas.

The Bonus section of the report covers data from 48 companies in 21 industry sectors, and the Sales Compensation section covers data from 97 individual sales compensation plans across 69 companies in 17 industry sectors.

The Bonus section of the report presents information on the design features and administration of broad-based variable compensation plans for companies that took part in the survey. The report outlines the main factors affecting variable compensation plans, changes and improvements companies are planning to introduce, as well as the key measures in place to ensure that compensation plans are delivering on their objectives.

The Sales Compensation section focuses on the design features of sales incentive plans. In the new environment of improving macroeconomic conditions and tougher regulatory requirements, sales compensation plans need to be designed to balance maximum return on investment whilst remaining fully compliant with regulatory demands. This report details the current best practice with regards to selecting the most appropriate plan performance measures, target setting and mechanics, including thresholds and caps, and other aspects of setting up and running effective and compliant sales incentive plans.

The survey questionnaire was distributed to a wide range of organisations across Europe. Each participating company provided information on their existing plans, which for some included multiple plans. The responses were then collated and analysed to produce the survey findings in this report.

Where appropriate, mean, median and 25th and 75th percentile of the responses were taken. In some instances the percentage of total population exceeds 100%, which is due to participants selecting more than one response to a multiple choice question.

We hope you find this report interesting and useful, and we look forward to discussing the results with you in more detail.

Introduction

Andrew MacLeod

Head of EMEA Reward [email protected]+44 (0)207 086 9181

Marco Reiners

Head of Reward, Central [email protected]+49 (0)89 88987 313

Jackie Waller

Principal Reward Consultant, [email protected]+44 (0)1727 888394

Karin Trigell

Head of Reward, [email protected]+46 (0)705 71 0812

Contents

8 10 14Survey participant demographics

Plan coverage and eligibility

18 21 22Plan objectives and success measures

Communication Funding

26 2922 Triggers, performance and pay-outs

Performance measuresPlanned changes and improvements

3Introduction

6Bonus section

Executive summary

Sales Compensation section

32 33 35Executive summarySurvey participant demographics

Nature of sales and sales cycle

36 38 39Performance measures Levels of performance at which incentive is earned

Target allocation

40 Planned changes and improvements

30

Bonus section

8

Executive summaryThe Bonus section of the survey covers data from 48 companies across 21 industry sectors in 15 European countries.

This section focuses on:

1. Plan coverage and eligibility

2. Plan objectives and success

3. Communication

4. Funding

5. Triggers, performance and pay-outs

6. Performance measures

7. Planned changes and improvements

Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper.

Suscipit lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in hendrerit in vulputate velit esse molestie consequat, vel illum dolore eu feugiat nulla facilisis at vero eros et accumsan et iusto odio dignissim qui blandit praesent luptatum.

Zzril delenit augue duis dolore te feugait nulla facilisi. Nam liber tempor cum soluta nobis eleifend option congue nihil imperdiet doming id quod mazim placerat facer possim assum. Typi non habent claritatem insitam; est usus legentis in iis qui facit eorum claritatem. Investigationes demonstraverunt lectores legere me lius quod ii legunt saepius. Claritas est etiam processus.

Dynamicus, qui sequitur mutationem consuetudium lectorum. Mirum est notare quam littera gothica, quam nunc putamus parum claram, anteposuerit litterarum formas humanitatis per seacula quarta decima et quinta decima. Eodem modo typi, qui nunc nobis videntur parum clari, fiant sollemnes in futurum. Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation.

Ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in hendrerit in vulputate velit esse molestie consequat, vel illum dolore eu feugiat nulla facilisis at vero eros et accumsan et iusto odio dignissim qui blandit praesent luptatum zzril delenit augue duis dolore te feugait nulla facilisi. Nam liber tempor cum soluta nobis eleifend option congue nihil.

Imperdiet doming id quod mazim placerat facer possim assum. Typi non habent claritatem insitam; est usus legentis in iis qui facit eorum claritatem. Investigationes demonstraverunt lectores legere me lius quod ii legunt saepius. Claritas est etiam processus dynamicus, qui sequitur mutationem consuetudium lectorum. Mirum est notare quam littera gothica, quam nunc putamus parum.

Claram, anteposuerit litterarum formas humanitatis per seacula quarta decima et quinta decima. Eodem modo typi, qui nunc nobis videntur parum clari, fiant sollemnes.

In futurum lorem ipsum dolor sit amet.

Consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat duis autem.

1. Vel eum iriure dolor in hendrerit in vulputate velit esse molestie consequat, vel illum dolore eu feugiat nulla facilisis at vero eros.

2. Et accumsan et iusto odio dignissim qui blandit praesent luptatum zzril delenit augue duis dolore te feugait nulla facilisi.

9

3. Nam liber tempor cum soluta nobis eleifend option congue nihil imperdiet doming id quod mazim placerat facer possim assum. Typi non habent claritatem.

4. Insitam est usus legentis in iis qui facit eorum claritatem. Investigationes demonstraverunt lectores legere.

10

Survey participant demographics

AerospaceAirbusJet Aviation

Automotive / Vehicle ManufacturingBenteler AutomobiltechnikJohnson Controls Power SolutionsRicardoToyota Motor EuropeVisteon Innovation & Technology

Building MaterialsLafarge

Business ServicesRandstad DeutschlandSerco

ChemicalsBorealisRoquette ItaliaSGL CarbonTrevira

Consumer ProductsKallo Foods

Energy (Oil, Gas & Coal)Fortum OyjRepsol

Energy ServicesSchneider Electric

Food, Beverage & TobaccoDiageoSimpsons Malt

Forest & Paper Products / PackagingMondi

Health Care / Medical ServicesMedicover

Hi Tech / Information TechnologyAquasoftGlobal Foundries Management ServicesIndra

Industrial Machinery / EquipmentKrones

InsuranceBaloise Group

Mining / Milling / SmeltingEramet

Multi Industry3M ItaliaJohnson ControlsSiemens

OtherCH2M HillCoral RacingHertz

Other - ManufacturingGardner DenverS&B Industrial MineralsSmartrac TechnologyTimken Europe

Real EstateHammerson

Research / DevelopmentNovaled

Telecommunications - ProductsAlcatel-LucentAMCVertu Corporation

Telecommunications - ServicesCosmote RMTRomtelecomT-Systems International

Textiles / Apparel ManufacturingRodenstock

11

Industry sector

The Bonus section of the survey covers data from 48 companies across 21 industry sectors in 15 European countries. The highest percentage of participants are from Manufacturing, Telecoms and Hi Tech & IT sectors.

Sales revenue

From the revenue perspective, this year’s participants are at the larger end of the market, with 62% of companies reporting revenue of over €500million and only 3% of respondents showing revenue of less than €50million.

> €10,000m 28%

€5,001m - 10,000m 14%

€1,001m - 5,000m

17%

3% €501m - 1,000m

16% €251m - 500m

14% €101m - 250m

5%

€50m - 100m

3%

Other 7%

Natural Resources 7%

Professional & Financial Services 9%

Chemicals 11%

14%

28% Manufacturing

14% Telecommunications

5% 5%

Consumer Products

Materials & Packaging

Hi Tech & IT

< €50m

12

Number of employees

Nearly a half of the participants have less than 5,000 employees, 13% have 5,000-10,000 employees and 39% have over 10,000 employees.

Business areas covered by the plans

The majority of plans in this survey (57%) cover all business areas, including sales.

39% > 10,000 employees

2% 9%

251 - 500 employees 9%

501 - 1,001 employees 4%

1,001 - 5,000 employees 24%

13%5,001 - 10,000 employees

101 - 250 employees

50 - 100 employees

57% All business areas including sales

All business areas excluding sales 32%

4%4%

2% Business Support (e.g. Finance, HR & Legal)

Manufacturing & Operations Client-facing (e.g. Brokerage, Sales & Consultancy) n=47

13

Most recent business performance for area covered by the plan(s)

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Ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in hendrerit in vulputate velit esse molestie.

Category 1 Category 2 Category 3

2014 2011 2014 2011 2014 2011

XX% XX%

XX%

XX%

XX%

XX%

2014: n=47

2011: n=69

14

Plan coverage and eligibility Plan coverage

Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper suscipit

n=47

Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7

XX%

XX% XX%

XX%

X% X% X%

15

Eligibility

Lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in hendrerit in vulputate velit esse molestie consequat, vel illum dolore eu feugiat nulla facilisis.

At vero eros et accumsan et iusto odio dignissim qui blandit praesent luptatum zzril delenit augue duis dolore te feugait nulla facilisi. Nam liber tempor cum soluta nobis eleifend option congue nihil imperdiet doming id quod mazim placerat facer possim assum. Typi non habent claritatem insitam; est usus legentis in iis qui facit eorum.

n=47

Type 1 Type 3 Type 4 Type 5 Type 6 Type 8 Type 9

XX%XX%

XX% XX%

X% X%X% X% X%

Type 2 Type 7

Minimum service eligibility

Claritatem investigationes demonstraverunt lectores legere me lius quod ii legunt saepius. Claritas est etiam processus dynamicus, qui sequitur mutationem consuetudium lectorum. Mirum est notare quam littera gothica quam.

Nunc putamus parum claram, anteposuerit litterarum formas humanitatis per seacula quarta decima et quinta decima. Eodem modo typi, qui nunc nobis videntur parum clari, fiant sollemnes in futurum.

Category 1 Category 2 Category 3 Category 4 Category 5

2014 2011 2014 2011 2014 2011 2014 2011 2014 2011

XX%XX%

XX%XX%

X%X% X%

X%X%

XX%

2014: n=46

2011: n=54

16

Rules regarding termination

Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in hendrerit in vulputate velit.

Esse molestie consequat, vel illum dolore eu feugiat nulla facilisis at vero eros et accumsan et iusto odio dignissim qui blandit praesent luptatum zzril delenit augue duis dolore.

Exceptions for good leavers

Te feugait nulla facilisi. Nam liber tempor cum soluta nobis eleifend option congue nihil imperdiet doming id quod mazim placerat facer possim assum. Typi non habent claritatem insitam; est usus legentis in iis.

XX%

Lorem ipsum dolor sit amet consectetuer adipiscing elit sed diam

Nonummy nibh euismod tincidunt ut laoreet dolore magna

Aliquam erat volutpat ut wisi

Enim ad

2014: n=47

2011: n=82

Category 1 Category 2 Category 3 Category 4

2014 2011 2014 2011 2014 2011 2014 2011

XX%

XX%XX%

XX%

XX%

X% X% 2014: n=46

2011: n=45

XX%

2014

2014

2014

2014

2011

2011

2011

2011

XX%

XX%

XX%

XX%

XX%

XX%

XX%

17

Reasons for no award

Qui facit eorum claritatem. Investigationes demonstraverunt lectores legere me lius quod ii legunt saepius. Claritas est etiam processus dynamicus, qui sequitur mutationem consuetudium.

Lectorum mirum est notare quam littera gothica, quam nunc putamus parum claram, anteposuerit litterarum formas humanitatis per seacula quarta decima et quinta decima. Eodem modo typi, qui nunc nobis videntur parum clari, fiant sollemnes in futurum.

2014 2011 2014 2011 2014 2011 2014 2011

XX%

XX%

XX%- X% - X%

XX%

Category 1 Category 2 Category 3 Category 4

2014: n=35

2011: n=94

18

Plan objectives and success measures

Key objectives

Companies were asked to indicate their primary, secondary and tertiary objectives for their variable pay plans. The 2014 survey showed that lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat.

Hendrerit in vulputate velit esse molestie consequat vel illu.

2014 Primary objective

XX%

XX%


Nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat

XX%

X%

Ut wisi enim ad minim veniam quis nostrud

X% Laortis nisl ut aliquip ex ea commodo consequat

X% Duis autem vel eum iriure

Exercisi tation ullamcorper suscipit

2014 Secondary objective

XX%

XX%

Dolor te feugait nulla facilisi

Nam liber tempor

XX%

XX%

Cum soluta nobis eleifend option congue nihil

X% Facer possim assum

X% Typi non habent

Imperdiet doming id quod mazim placerat

2014 Tertiary objective

XX%

XX%

Claritatem insitam est usus

Legentis in iis qui facit

X%

X%

Eorum claritatem investigationes

X% Me lius quod ii legunt saepius claritas est etiam processus dynamicus

X% Qui sequitur mutationem consuetudium lectorum

Demonstraverunt lectores legere

n=47

n=46

n=47

19

Success in achieving objectives

Companies were also asked to report on how well their plans achieved the objectives sought.

A deeper analysis of the data reported shows that the biggest areas of change from 2011 are an increased achievement of dolore eu feugiat nulla facilisis at vero eros (up to 100% from 33%), et accumsan et iusto odio (up to 88% from 50%) and dignissim qui blandit praesent (up to 67% from 22%).

The biggest decreases in achievement report were for: luptatum zzril delenit augue (down to 20% from 64%) and duis dolore te feugait nulla (down to 45% from 63%).

In terms of objectives that were partially or not achieved, some of the biggest changes were: facilisi nam liber tempor cum soluta nobis eleifend (up to 75% from 50%) and option congue nihil imperdiet doming (up to 50% from 33%).

Successful Not successful Primary objective

XX%

XX%

XX%

XX%



XX%

XX%

XX%

XX%


XX% XX% Laortis nisl ut aliquip ex ea commodo consequat

XX%

XX%

XX%

XX%

Duis autem vel eum iriure


XX%

XX%

XX%

XX%

Nam liber tempor


XX% XX% Imperdiet doming id quod mazim placerat


Successful Not successful Secondary objective

XX%

XX%

XX%

XX%

Facer possim assum

Typi non habent

XX%

XX%

XX%

XX%


XX% XX% Eorum claritatem investigationes

XX%

XX%

XX%

XX%


Me lius quod ii legunt saepius claritas est etiam processus dynamicus

XX%

XX%

XX%

XX%

Qui sequitur mutationem consuetudium lectorum


XX% XX% Nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat


Successful Not successful Tertiary objective

XX%

XX%

XX%

XX%



XX%

XX%

XX%

XX%

Laortis nisl ut aliquip ex ea commodo consequat

XX% XX% Dolor te feugait nulla facilisi

XX%

XX%

XX%

XX%

Nam liber tempor


XX%

XX%

XX%

XX%


Facer possim assum

XX% XX% Typi non habent


n=17

n=20

n=25

n=25

n=19

n=28

20

Factors contributing to and hindering the success of the plan

As reported by 63% of companies, lorem ipsum dolor sit amet remain the key factor contributing to the success of plans, with consectetuer adipiscing elit being the next most popular choice for 46% companies. It is also worth noting that a link to a sed diam nonummy nibh euismod tincidunt was considered to be critical by most companies.

The biggest hindrances reported by 38% of companies were the lorem ipsum dolor sit amet, consectetuer adipiscing elit for 31% of respondents and consectetuer adipiscing elit, as well as a sed diam nonummy nibh euismod tincidunt for 27% participants respectively.

A further analysis of this data to identify the differences for those companies that exceed business results versus those that did not achieve expected results shows that for those who exceeded expectations, lorem ipsum dolor sit amet, consectetuer adipiscing elit and sed diam nonummy nibh euismod tincidunt. For those who did not meet business expectations, lorem ipsum dolor sit amet was the most significant hindrance, alongside consectetuer adipiscing elit and sed diam nonummy nibh euismod tincidunt.




Laortis nisl ut aliquip ex ea commodo consequat



Nam liber tempor


Contributing to success

XX%

Hindering success


Reviewing plan success

The table below shows the most common measures companies use to determine the effectiveness of their variable pay plans.

The key change from 2011 is that our 2014 participants seem to be lorem ipsum dolor sit amet. For example, the 2014 survey shows that 94% of respondents now consectetuer adipiscing elit. There was also a significant increase in the proportion of companies using sed diam nonummy nibh euismod tincidunt. This is not surprising given the increased focus on ensuring that return on investment of the incentive spend is maximised.


Facer possim assum




Me lius quod ii legunt saepius claritas est etiam processus dynamicus

Qui sequitur mutationem consuetudium lectorum

2014

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

2011

XX%

XX%

-

XX%

-

XX%

-

-

-

XX% Lorem ipsum dolor sit amet consectetuer adipiscing elit sed diam


n=133 n=70

n=47 n=62

Typi non habent

XX%

XX% XX%

XX% XX%

XX% XX%

XX% XX%

XX% XX%

XX% XX%

XX% XX%

XX% XX%

21

Alignment of plans to business objectives

Companies were asked to indicate how well they thought their plans were aligned to their business objectives. The results are lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam.

There are noticeable differences between high-achieving and low-achieving companies here, too. 55% of companies who exceed business results felt quis nostrud exerci tation ullamcorper suscipit lobortis compared to only 25% of those who did not meet the expected business results.

XX% Type 2

XX% Type 1

X% Type 3

CommunicationWe asked companies to report the methods they thought were most effective in communicating their bonus plans to employees. Unsurprisingly, lorem ipsum dolor sit amet were thought to be most effective by the majority of respondents, an increase from 37% from 2011.

Effective communication is still a high priority for many, with XX% of our participants reporting they were planning to introduce consectetuer adipiscing elit sed in 2014 (see ‘Planned changes and improvements’ section on page 30).




2014

XX%

2011

- Laortis nisl ut aliquip ex ea commodo consequat




Nam liber tempor

2014

-

2011



Facer possim assum

Typi non habent


2014

-

-

2011



Most effective communication method

Second most effective communication method

Third most effective communication method

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

22

Funding

Funding methodsLorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in hendrerit in vulputate.

Triggers, performance and pay-outs

Performance triggers

We asked companies whether their plans had an automatic trigger for pay-outs and if so what conditions must be met for this trigger to be activated.

Just over three quarters of respondents (77%) stated that eugiat nulla facilisis at vero eros et accumsan et iusto odio dignissim qui blandit praesent luptatum zzril delenit. This is a 10% increase compared to 2011.

Of these, 37% stated that nobis eleifend option congue nihil imperdiet doming id quod mazim placerat facer possim assum. Typi non habent claritatem insitam. Est usus legentis in iis qui facit.

XX%XX%

XX%

Sed diam nonummy nibh euismod tincidunt ut

XX%

No

Lorem ipsum dolor sit amet consectetuer

Adipiscing elit

XX%XX%

X% XX%X% X%

2014 2011 2014 2011 2014 2011

Lorem ipsum dolor sit amet, consectetuer adipiscing elit sed

diam nonummy

Nibh euismod tincidunt ut laoreet dolore magna aliquam erat

volutpat. Ut wisi enim

Quis nostrud exerci tation ullamcorper suscipit lobortis nisl

ut aliquip ex ea

2014: n=45

2011: n=79

23

Additives and multipliers

The purpose of this question was to determine whether participants have an additive or multiplier to their plans, which could potentially enhance performance.

Eorum claritatem. Investigationes demonstraverunt lectores legere me lius quod ii legunt saepius. Claritas est etiam processus dynamicus qui.

Sequitur mutationem consuetudium lectorum. Mirum est notare quam littera gothica, quam nunc putamus parum claram, anteposuerit litterarum formas.

Relationship between company performance and award pay-out

Humanitatis per seacula quarta decima et quinta decima. Eodem modo typi, qui nunc nobis videntur parum clari, fiant sollemnes in futurum. Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat.

Type 1

Type 2

XX%

XX%

XX% Type 3

60%50%

25%

50%

75%

100%

125%

150%

175%

70% 80% 90% 100% 110% 120% 130% 140% 150%

Decima et quinta decima

Minimum

Maximum

Target

Hum

anita

tis p

er s

eacu

la q

uart

a

Legend text Legend text Legend text

24

A more detailed analysis of lower versus higher performing companies shows that the key difference is around the lorem ipsum dolor sit amet. Survey respondents that did not achieve their expected business results averaged a XX% target performance expectation, compared to XXX% for those companies that exceed business results. The maximum performance set for the low-performing companies was XXX% compared to XX% for the high-performing companies.

Relationship between performance management process and pay-out

The survey results show that the majority of plans lorem ipsum dolor sit amet, although there is a slight reduction on 2011 figures (XX% down from XX% in 2011).

There is a slight increase in the proportion of consectetuer adipiscing elit (XX% compared to XX% in 2011). And there is a also a small increase in sed diam nonummy nibh euismod tincidunt (XX% against XX% in 2011).

2014 2011 2014 2011 2014 2011

XX%

XX%

XX%XX%

XX%XX%


2014: n=46

2011: n=44

Maximum

Performance

XXX% XXX%

XXX%

XXX%

XXX%

XXX%

XXX% XXX%

Target

XX% XX%

XX%

XX%

XX%

XX%

XX% XX%

Threshold

Performance

XX%

Pay-out

XX%

XX%

XX%

XX%

XX%

XX% XX%

Average

Median

25th percentile

75th percentile

Pay-outPerformance Pay-out

25

Performance determination

The majority of companies (XX%) determine performance against lorem ipsum dolor sit amet. This is followed by XX% of companies who set the standard based on consectetuer adipiscing elit, and XX% of organisations who set the standard relative to sed diam nonummy nibh euismod.

Pay-out frequency

An overwhelming majority of participants pay their bonuses on an lorem ipsum dolor sit amet. An equal weighting of X% pay out bonuses on consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut.

XX%

X% X% X%

Type 1

Type 2

Type 3

Type 4

XX%

XX%

X%

X%


XX%

Category 4 Category 5

26

Performance measuresFinancial measures

The type of financial measures used varies according to the unit within an organisation. The most prevalent financial measure in corporate entities is lorem ipsum dolor sit amet. However, at a country level the focus is on consectetuer adipiscing elit, as well as sed diam nonummy nibh euismod tincidunt at a regional level. On an individual and team level, nibh euismod is the most important measure.

Non-financial measures

As might be expected, we saw few non-financial measures at the corporate and country level. At individual level, lorem ipsum dolor sit amet were the main criteria, with consectetuer adipiscing elit sed diam and consectetuer adipiscing elit being important too.

In recent years, customer satisfaction has become more prevalent in financial services and insurance sector plans, and we are seeing this spreading to a wider range of sectors.

Corporate Global / Regional

XX%

-

XX%

XX%

Cash flow

Cost savings

XX%

XX%

XX%

XX%

EBIT

X% - EVA

-

XX%

X%

XX%

Gross margin

Net profit

X%

-

XX%

-

Operating budget / income / costs

Operating profit

X% XX% Return on assets / equity / investment

EBITDA

Country Individual / Team

X%

XX%

XX%

-

X%

-

-

-

- XX%

X%

X% XX%

X%

-

XX%

XX%

XX% XX%

XX% X% Revenue / sales X% X%

-

Corporate Global / Regional

X%

X%

-

XX%

Customer satisfaction

Discretionary business performance

-

-

-

-

Employee development & engagement

- - Market share & expansion

-

-

-

-

Operational excellence

Other

X%

-

XX%

-

People management / leadership

Productivity

- - Quality, safety & environment

Individual goals / targets / performance

Country Individual / Team

-

-

XX%

XX%

-

-

-

-

- -

-

- -

X%

-

XX%

XX%

- -

- - Risk Management - -

-

n=62 n=34 n=13 n=12

n=62 n=34 n=13 n=12

27

Weighting of measures

Across all levels of employee, lorem ipsum dolor sit amet consistently achieves the highest weighting, followed by consectetuer adipiscing elit. Although this mainly applies to professional staff and upwards. Consectetuer adipiscing elit, sed diam nonummy and nibh euismod tincidunt typically have a high weighting across all employee levels.

This is a marked change from 2011, when revenue was the most heavily weighted measure, followed by net profit and lorem ipsum.

In terms of non-financial measures, lorem ipsum dolor sit amet is the most heavily weighted measure across all levels of employees, followed by consectetuer adipiscing elit sed.

In 2011 it was nonummy nibh euismod tincidunt followed by ut laoreet dolore magna.

Senior Middle

XX%

XX%

XX%

XX%

Cash flow

Cost savings

XX%

XX%

XX%

XX%

Discretionary business performance

XX% XX% EBITDA

XX%

XX%

XX%

XX%

EVA

Gross margin

XX%

XX%

XX%

XX%

Net profit

Operating budget

XX% XX% Operating profit

EBIT

Professional Administrative

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX% XX%

XX%

XX% -

XX%

XX%

XX%

XX%

XX% -

XX% XX% Return on assets / equity / investment XX% XX%

-

Manual

XX%

-

XX%

XX%

XX%

-

-

XX%

XX%

-

XX%

XX% XX% Revenue / sales XX% XX% XX%

Senior Middle

XX%

XX%

XX%

XX%

Customer satisfaction

Employee development & engagement

XX%

XX%

XX%

XX%

Individual goals / targets / performance

XX% XX% Operational excellence

XX%

XX%

XX%

XX%

Other

People management & leadership

XX%

XX%

XX%

XX%

Productivity

Quality, safety & environment

XX% XX% Risk management

Market share & expansion

Professional Administrative

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX% XX%

XX%

XX% XX%

XX%

XX%

XX%

XX%

XX% XX%

XX%

Manual

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

n=44 n=38 n=28 n=13 n=47

n=36 n=32 n=27 n=15 n=40

28

Number of measures used

We asked companies to report the number of performance measures used in order to determine awards.

The graph below shows the weighting of financial and non-financial measures used. Unsurprisingly, more managers and senior employees were evaluated against financial measures, while administrative and manual staff tended to be measured against non-financial measures.

The second graph shows the average number of measures used by the companies. More senior employees and management were measured against a greater number of categories, whilst administrative and manual staff were evaluated against fewer measures.

Survey findings show that high-achieving companies use lorem ipsum dolor sit amet. Companies that exceeded their business results reported an average of X.X categories with the rest reporting an average of X.X measures.

Senior management

Middle management

Professional Administrative Manual

XX%

XX%

XX%

XX%

XX%

XX%XX% XX% XX%

Financial

Non-financial

XX%

Senior management

Middle management

Professional Administrative Manual

Total

Financial

Non-financial

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X

X.X X.X

29

Planned changes and improvements

Perhaps to reflect the increasingly healthy business environment, this year a significant number of companies are planning to introduce changes to their ut wisi enim ad minim veniam quis nostrud (XX% compared to XX% in 2011).

Over a third are also planning to lorem ipsum dolor sit amet and consectetuer adipiscing elit sed diam (XX% compared XX% in 2011), a reflection of the importance of nonummy nibh euismod tincidunt.

Change performance criteria

Introduce additional communication / training

No changes

Change plan objectives

Reduce number of employee groups

Change funding formula

Increase expected award opportunities

Decrease expected award opportunities

2014

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

2011

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX% Other

Extend plan coverage to additional employee groups

Percentages will exceed 100% due to respondents providing several answers to a multiple choice question. n=82 n=53

Sales Compensation section

32

Executive summaryThe Sales Compensation section of the report covers data from 97 sales incentive plans across 69 companies in 17 industry sectors and 15 European countries.

This section focuses on:

1. Nature of sales and sales cycle

2. Performance measures

3. Levels of performance at which incentive is earned

4. Target allocation

5. Planned changes and improvements

The improving business environment across Europe is increasing the emphasis on the importance of well-designed sales incentive plans. This improving macro-economic backdrop also implies increased sales potential, making it even more imperative that incentive schemes are designed in such a way that they are conducive to making the most of this potential.

However, this needs to be balanced with the fact that many organisations, especially those in the financial services and insurance sectors, are now facing greater scrutiny over the structure of their incentive plans. Recent history of miss-selling and prioritisation of short-term sales targets over customer welfare and sustainable long-term organisational success means that companies now need to review their sales incentive plan design with some care. This is reflected in a growing number of companies who involve top leadership, as well as HR and sales functions in the development of their incentive plan design.

The graph below shows the spread of functions involved in designing and administering sales compensation plans.

Lorem, ipsum and dolor still remain the most prevalent and highly weighted measures in sales incentive plans across Europe. Although sit amet and consectetuer are still weighted fairly low compared to financial measures, it is encouraging to see them slowing gaining popularity.

A significant number of companies (XX%) are planning introduce changes and improvements to their sales plans in next 6 – 12 months. Given that nearly a half of the survey respondents (45%) use lorem ipsum dolor sit amet as one of the factors determining sales targets, these changes may be another reflection of the improving economic environment.

Function 1 Function 2 Function 3 Function 4 Function 5 Function 6

Own design (no of companies) Involved in administration (no of companies)Involved in plan design (no of companies)

XX

XX

XX

XX

XX

XX

XX

X

XX

XX

X

XX

X

X

X

XX

X

X

33

Survey participant demographics

Aerospace & AutomotiveJet Aviation Johnson Controls

Business ServicesConvergys CorporationG4S KantarRandstad Sage UK Serco Xchanging

Construction & EngineeringBalfour Beatty Services Barratt Developments Edwards VacuumFinning UK KBRLafarge Terex USA, Terex Aerial Work Platforms

Electronics & ElectricalEnergizerEpsonGlobalfoundries Ricoh Europe Schneider Electric Smartrac Xerox

Energy & Industrial3MAlfa Laval AquasoftEmerson Industrial AutomationGardner DenverMondiRepsolRolls-Royce (Energy)RWE nPowerSGLTimkenWR Grace

Financial ServicesAviva UK LifeBMW Group Financial ServicesCanada LifeCigna International UKJust Retirement MedicoverRBS - UK Retail

HealthcareEvotecWolters Kluwer Health

Retail & Consumer3663Coca-Cola EnterprisesDiageoHertzKallo FoodsKraft FoodsMolson Coors Brewing Simpsons MaltTiffany & Co.Trainline.comTrevira

Telecommunication, Media & TechnologyAlamyAlbanian Mobile CommunicationsAlcatel LucentCosmote RomaniaMail Newspapers (Mail on Sunday/Daily Mail)NCRRomtelecomSAPSepuraSpirent CommunicationsVerizon EMEA and APACVertuWiley

34

Industry sector

The Sales Compensation section of the survey covers data from 97 unique sales compensation plans across 69 cmpanies in 17 industry sectors in 15 European countries.

The highest percentage of participants are from Telecommunications, Media & Technology, Retail and Distribution, and Energy and Industrial sectors.

Number of plans in place

Nearly half of the companies (XX%) reported having X number of plan(s) in place, and, at the other end of the spectrum, nearly a third (XX%) reported having X number of plan(s).

19% Telecoms, Media & Technology

18% Retail & Consumer

3%3%

17%Business Services 10%

Construction & Engineering 10%

Electronics & Electrical 10%

Financial Services 10%

Aerospace & AutomotiveHealthcare

Energy & Industrial

XX% X plan(s)

XX%

X plan(s)

X plan(s) X%

X plan(s) X%

X plan(s) XX%

35

Nature of sales and sales cycle

The sales cycle

The most prevalent sales cycle length was up to XX months.

XX to XX months jointly account for 81% of sales compensation plans.

The length of a sales cycle is typically determined by the type of product sold (complex and low-volume products and services tend to have longer sales cycles), and typically is a key input in determining the appropriate mix of fixed and variable pay for a sales role.

Nature of the product / service

The nature of products sold is another key input for determining an appropriate mix of pay.

Nearly half of the survey respondents (XX%) reported having a combination of product types in place, while XX% reported having simple products and XX% having complex products to sell.

Payout frequency of sales incentive plans

The graph on the right illustrates the relative proportion of payment frequency among the sales compensation plans.

The most prevalent frequency at which incentives are paid out is frequency 1 (XX%) and frequency 2 (XX%), reflecting the shorter sales cycles reported above.

XX% XX months

Up to XX months XX%

Up to XX months XX%

X%X%

Less than XX months More than XX months

XX% Combination

X%

Complex, consultative, low volume

Complex, varied XX%

Simple, few XX%

XX%

Transactional, simple, high volume

XX% Frequency 1

X% Frequency 2

XX%

Frequency 3

Frequency 4 XX%

X%

Other

36

Performance measuresPrevalence of measures

The graph below illustrates prevalence of performance measures underpinning sales compensation plans for different types of sales roles.

Lorem and ipsum still remain the most popular measures, with dolor sit and amet still fairly low in prevalence.

Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Category 8 Category 9 Category 10

Category 11

Category 12

10%

0

20%

30%

40%

50%

60%

70%

80%

Direct sales executive

Indirect sales executive

Inside sales / telesales executive

Sales manager

Account manager

37

Weighting of measures

The graph below illustrates median weightings of performance measures in sales compensation plans for the different roles.

Lorem consistently has the highest weighting across all job categories, followed by ipsum / dolor. These two measures typically have an immediate impact on sales performance.

Over time organisations may switch to performance measures that drive long-term organisational growth, such as consectetuer adipiscing elit, sed diam nonummy nibh as well as euismod tincidunt.

Direct sales executive

Indirect sales executive

Inside sales / telesales executive

Sales manager

Account manager

10%

0

20%

30%

40%

50%

60%

70%

80%

Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Category 8 Category 9 Category 10 Category 11

38

Levels of performance at which incentive is earned The graph below illustrates sales performance level required across different job categories to achieve a certain incentive payment.

There is a linear relationship up to the target level of performance (100%) and incentive for all categories of roles. Beyond the target level of performance this relationship becomes slightly more exponential.

Although it is not apparent here, it is not uncommon for organisations to provide an incentive payment that is two to three times above the target for achieving beyond target performance (100%).

50%>0% 80% 200%150%100% 250%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Role 1 Role 2 Role 3 Role 4 Role 5

39

Target allocationPrevalence of performance factors used to determine target allocation

Traditionally, category 2 has been the key factor in target setting for sales roles, as it provides a solid base of market intelligence that enables companies forecast their future sales performance. For nearly half of the companies (XX%) taking part in our study, it still is.

Survey results suggest that category 5 is an equally important measure. XX% of companies use this measure too when making their target setting decisions.

Prevalence of minimum performance threshold

As expected, the frequency of performance threshold below which no incentive is paid varies by the type of the sales role. For example, aliquam erat volutpat ut wisi enim ad minim veniam, quis nostrud exerci tation ullamcorper suscipit lobortis.

The graph below shows the percentage of companies reporting a minimum performance threshold for the different roles.

XX%

XX%

X%X%

XX%

XX%

XX%

XX%

XX%

X%

Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 Category 8 Category 9 Other

Yes

No

Role 1 Role 1 Role 3 Role 4 Role 5 Role 6

XX% XX% XX% XX% XX% XX%

XX% XX%

XX% XX%

XX%

XX%

40

Prevalence of payment caps above a certain level of performance

There is a similar variation in job roles when it comes to sales compensation plans that have a payment cap limiting the level of upside an incumbent can earn.

Planned changes and improvementsJust over half (XX%) of the companies surveyed said they had introduced changes to their sales compensation plans in the past six months. Of these, XX% rated the changes made as effective.

Two thirds of respondents (XX%) stated that they were planning to make changes and improvements to their sales incentive plans in the next six to twelve months.

XX% Yes

No XX%

Made changes to the plan in the past 12

months?

Were the changes effective?

XX% Yes

Neutral or unsure

XX%

No X%

Planning to make changes to the plan

in the next 6-12 months?

XX% Yes

No XX%

Role 1 Role 2 Role 3 Role 4 Role 5 Role 6

Yes

No

Is payment capped above a certain level of performance?

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

XX%

42

With a database spanning 180 countries, 6 million employees, and 800 globally consistent benchmark positions, Aon Hewitt’s global compensation data provides organisations with the quality information they need for quick and effective decision making.

At Aon Hewitt, we help you drive business performance by maximising your investment in people. Our compensation solutions include:

1. Total rewards strategy, design and communication2. Broad-based pay analysis3. Market pricing and measurement4. Salary structure development5. Job evaluation6. Pay equity analysis7. Performance management design and implementation8. Incentive and Recognition plan design9. Salesforce compensation10. Executive remuneration analysis and consulting

To discuss how Aon Hewitt can help you improve compensation in your organisation, please contact us at: [email protected]

Aon Hewitt compensation consulting

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This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt’s preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document.

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