What is a pay policy mix?

Pay mix is the ratio of base salary to target incentives that make up On-Target Earnings (OTE). For example, a 60/40 pay mix means that 60% of OTE compensation is fixed base salary, and 40% of OTE compensation is Target Incentive (TI), or variable pay.

What are the components of a pay mix?

Pay mix is the ratio of fixed pay to variable pay in a salesperson’s compensation. It’s represented as a percentage split of total target compensation (TTC), with the first number representing base salary, and the second the target incentive amount.

How is pay mix calculated?

It’s easy to calculate pay mix. On-target commission divided by OTE equals the percentage of your pay tied to the commission. Base salary divided by OTE equals the percentage tied to base salary. For instance, if your on-target earnings are $100,000 and your base pay is $54,000, your pay mix is 54/46.

What are the three pay level policies?

There are three main compensation strategies: leading the market, meeting the market and lagging the market. Leading the market is when you pay employees more than the market rate, whereas lagging the market is when you pay below it. Meeting the market is when you pay your employees the going market rate.

How does a 70/30 salary work explain?

A 70/30 pay mix allocates 70 percent of the target total compensation to base salary and 30 percent to target incentive. Pay mixes vary from 50/50 to 85/15. Use a more aggressive pay mix for “high influence” sales jobs and a less aggressive pay mix for “lower influence” sales jobs.

What is a 60/40 sales split?

In other words, 60/40 means 60 percent of TTC is base salary and 40 percent of TTC is the target incentive. For example, if a job has a TTC of $100,000 with a 60/40 pay mix, then the base salary would be $60,000 (60 percent x $100,000) and the target incentive would be $40,000 (40 percent x $100,000).

What is an 80/20 compensation plan?

For SEs, the most common payment structure is 80/20. This means 80% is a base salary and it is a guaranteed salary. So if you are a SE and your sales team doesn’t sell a single dime’s worth of product, you would end up making this 80%.

What is a 60/40 split pay?

Pay Mix Primer In other words, 60/40 means 60 percent of TTC is base salary and 40 percent of TTC is the target incentive. For example, if a job has a TTC of $100,000 with a 60/40 pay mix, then the base salary would be $60,000 (60 percent x $100,000) and the target incentive would be $40,000 (40 percent x $100,000).

What are pay strategies?

Pay strategies communicate how the district wants to pay its employees relative to the market, including neighboring districts and other competitors.

What are some compensation strategies?

Common compensation strategies include:

  • Overtime pay.
  • Variable salary based on experience or longevity.
  • Employee healthcare.
  • Raises and bonuses.
  • 401(k) or retirement package.
  • Profit sharing.
  • Paid time off (sick days, personal days or vacation time)
  • Education reimbursement or on the job training.

Why is pay Mix important?

Setting the appropriate pay mix is a key factor in the design of your sales compensation plan. Having the wrong pay mix can lead to losing top talent, not being able to attract top talent, or overpaying your talent.

What are the differences between pay level and pay mix compensation policies?

Partner | Sales Comp Practice Leader |… By “target” pay level, we mean the pay level that the “average” salesperson will earn for achieving expectations (often 100% of sales quota) in a given year. When we say “target” mix, we mean the way that total pay is delivered—either in base salary or in incentive pay.