Smaller Firms Pay Staff 46% More in Bonuses Than Multi-Billion Dollar Companies

Companies that make less than $100m in sales pay their staff 46% more in bonuses, compared to firms that make more than $1bn.

According to the first ever remuneration study based on empirical data, rather than survey results, Xactly's report shows that smaller companies are paying $1,000 (£594, €730) in variable compensation for every $22,000 in sales, compared to larger companies that pay the same amount for every $36,000 in sales.

However, the Software as a Service (SaaS) Industry Incentive Compensation Benchmark analysis also shows that 79% of sales representatives miss their quota and 14% never achieve even 10% of their targets.

"The data indicates that these SaaS companies may be responding to demands for growth with a feast or famine mentality, creating the risk of being too heavily dependent on top sales performers," said founder, president and CEO Christopher Cabrera of Xactly.

"This approach indicates that SaaS businesses may be tolerating underperformance and need to re-think their sales strategy to meet long-term company objectives of growth, retention and profitability."

The SaaS Industry Incentive Compensation Benchmark is the first in an ongoing series of reports that analyses 'big data' and find trends in the world of salary and bonuses that intend to help companies assess how they can build incentive schemes to create long term productivity and healthy profits.

Xactly intends to release several reports looking at all different type of industries.

Cloud Software and Pay Trends

The data was calculated via Xactly's enterprise cloud compensation platform, which calculates more than a billion transactions each month and more than $10bn in incentive compensation payouts over the last two years.

Xactly is a software firm that works with a range of companies of all sizes and industries to provide research and insight into optimal incentive compensation programmes, while also motivating staff through performance management.

Customers include Hyatt Hotels, Coca Cola, Twitter and Linkedin.

Many of the sessions and talks at CompCloud14 conference in San Francisco, California has centred around using software, cloud computing, and statistics to build variable compensation plans at all types of companies.

One of the key themes has been about not just rewarding staff for hitting targets but to inspire loyalty and less toxic methods of selling which have led to scandals across the globe.

Interestingly, a sub-set of the data released today showed that on average 15% of sales representatives who were in their roles for at least one year made quota, and 5% didn't achieve even 10% of quota.

Similarly, on average 16% of sales representatives in their role less than one year made quota, and 19% didn't achieve even 10% of quota.

Don't forget to check out IBTimes UK for more coverage on CompCloud14 from San Francisco, California.