Controlling Pay in 2022

Name: Controlling Pay in 2022
Uploaded: 2022-10-20T19:41:18+00:00
Duration: 2 min 2 s
Channel: SalesGlobe Sage
Description: YouTube video (SalesGlobe Sage) discussing how organizations adjusted incentive pay practices from 2020–2022 to control upside risk. Key points: use of…

20 Oct 2022 · 2 min

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2:02

YouTube video (SalesGlobe Sage) discussing how organizations adjusted incentive pay practices from 2020–2022 to control upside risk. Key points: use of pay caps dropped to 35% of organizations in 2020, rose to 56% in 2021, and fell to 50% in 2022. Firms are favoring alternatives to hard caps — notably increasing adoption of regressive payouts and megadeal policies — to preserve pay-for-performance while managing cost of sales. Megadeal policies are commonly defined in the content as limiting pay for deals larger than 50% of an annual sales expectation. Performance thresholds (minimum performance before earning incentives) held roughly steady: ~35% usage in 2020, ~60% in 2021, and ~59% in 2022.

Questions this video answers

35%

56%

50%

A megadeal is typically defined as more than 50% of an annual sales expectation.

About 35%

Chapters

What's the story? Controlling Pay as organizations incentive pay levels increased to hire and retain, they also decreased the use of incentive caps that were increased in usage across some industries throughout the pandemic years of 2020 and 2021. Companies reduced the use of caps during the beginning of the pandemic in 2020, with only 35% of organizations using them. As the economy heated up, this increased to 56% of organizations in 2021, now reducing to 50% of organizations in 2022. However, they are not doing away with risk mitigation overall and are instead favoring softer guardrails such as regressive payouts and megadeal policies to control upside pay. Regressive payouts are increasing in adoption, which correlates with companies removing caps in this supports a pay for performance philosophy and offers an alternative for companies to reward high performers for all their sales efforts while managing their overall cost of sales. Megadeal policies, which limit pay for extremely large deals, typically defined as more than 50% of an annual sales expectation, have increased in use, again supporting a pay for performance philosophy that balances rewarding salespeople for their efforts with cost of sales. Performance thresholds, defined as a minimum performance level before earning any incentive pay, has held steady with more than half of companies using a threshold in the plan. As with pay caps, companies reduced the use of thresholds during the beginning of the pandemic in 2020, with about 35% of organizations using them. As the economy heated up, this increased to about 60% of organizations in 2021 and is holding steady at about 59% of organ.