Employers are benchmarking jobs right now and establishing their 2025 base pay ranges and incentive targets for bonuses and sales commissions.
The salary survey data for the bonuses and commissions need to be reviewed carefully. Is the reported number in the salary survey an Actual incentive payout or is it the Target? What is the difference?
· The Target is the number that the employer will typically pay when the employee achieves the metrics at 100% in the incentive plan. Then there is typically a Threshold and Maximum defined in the incentive plan document. (Ask for this if you are negotiating a new job offer so you can understand what the payout is based on.)
· The Actual number reported in the salary survey is the payout that the employees received. This number is interesting but not one that I would use as the primary reference point for establishing the Target incentive for a job.
Remember the Actual number tells you what employees received.
· You don’t know if the employees were high performers, low or average performers. Maybe they were a mix of all three.
· The Actual number may also be influenced by the performance of the employer against metrics for a bonus payout. Was the employer a high, low, or average performer that year?
Recommendation: Use the Target incentive number in the survey and compare that with the Target you have established for the job. (If you have different Targets for employees doing the same job, fix that.)
And if you have a salary survey that only provides Actual and not Target numbers, look for a new salary survey source.
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