Business leaders are charged with driving growth and profitability through traditional levers such as brand awareness, new products and services, customer loyalty and improved productivity. But there are other factors that can dramatically impact the success of your revenue organization. For example, when something as seemingly mundane as job architecture doesn’t keep pace with the rapid change of the market and our business there can be significant unintended consequences, including increased turnover, decreased employee satisfaction, reduced revenue growth and lower earnings.
An Alexander Group technology client, a leader in Silicon Valley, was managing rapid growth but also faced compelling employee issues. Growing labor costs and increased churn threatened customer relationships and reduced support for sellers due to:
They needed a way to evaluate and map in new roles to meet emerging business needs and offer new pathways for senior-level contributors.
Outdated job profiles.
Current job descriptions did not reflect the required skills, competencies and experiences necessary for success.
Ill-defined job levels.
Career levels were not clearly defined, making promotions dependent on a change in business segments, leading to customer disruption.
High turnover, increased costs.
They continually lost talent to competitors, reducing targeted earnings while driving up total direct compensation.
Limited talent development.
Employees lacked the support and resources to navigate their careers and looked to competitor offerings.
This global technology leader wanted to reduce its turnover rate and align its 16,000 sellers to the appropriate number of jobs. They chose Alexander Group because of our industry credibility, experience and proprietary benchmarking database. This wealth of data would provide their organization with the right metrics to ensure they created a successful program.
Realigning job goals would require:
Alexander Group analyzed current job structure, competencies, job levels and career pathways. Information was collected through extensive interviews, organizational chart reviews, employee role analysis and leveling data to assess the current job architecture. Alexander Group also used our experience working with market leaders to identify gaps and opportunities for redesign.
Alexander Group analyzed pay levels, pay mixes, on-top-of-earnings (equity, overtime and SPIFFs), merit budgets and internal vs. external pay practices to evaluate the current practices and derive new compensation alternatives.
The Alexander Group’s analysis revealed underlying factors that drove misalignment between corporate growth, reduced revenue and employee turnover. Establishing a clear, flexible job architecture for global roles would create a foundational standard of jobs based on the blended roles necessary to support unique sales motions and responsibilities.
Based on market data and internal analysis, the findings revealed that the company’s combined merit and promotion budget fell below market averages, potentially resulting in employee compensation falling below competitor pay until the next promotion. We also discovered that sales compensation ratios for internal promotions were lower than for external hires. In addition, their current sales leadership fell below the 70th percentile of the market, with some closer to the 50th percentile.
The data analysis revealed that current practices resulted in below-market compensation, contributing to employee churn, increased costs and reduced earnings.
The redesigned job architecture included defined skills and competencies for each role and advancement opportunities. Recommended pay level practices included aligning the merit budget to market norms while adopting new pay structures that were market competitive. Finally, Alexander Group suggested reviewing the open headcount vs. the promotion budget based on historical data and talent progression.
The recommendations would assist employees in navigating their career path through a framework that addresses hiring, coaching and developing the right talent for the right jobs. This approach can improve resource visibility, reduce turnover and improve productivity as employees stay in their roles longer. In addition, offering competitive market pay reduces turnover and lowers pay variation between internal and external hires.
Increased clarity & transparency of role expectations and career paths
Higher productivity through increased tenure in roles
Alexander Group’s research shows that 60% of companies are looking at their sales compensation policies for hiring new vs. internal talent. Successful projects require an experienced partner to ensure you get the right results using not only market practices, but the insights and tools to help contextualize those market practices for your unique situation.
Find out how Alexander Group can help your organization drive revenue growth.
Alexander Group understands your revenue growth challenges. Since 1985, we’ve served more than 3,000 companies across the globe. This experience gives us not only a highly sophisticated set of best practices to grow revenue—we also have a rich repository of unique industry data that informs all our recommendations. Aligning product, marketing, operations and finance efforts behind a successful sales organization takes insight and hard work. We help the world’s leading organizations build the right revenue vision, transform their organizations and deliver results.
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