Compensation Plans
Within the chat room there is currently a section called, “Channel Compensation Plans.” This thread has several pages outlining a detail channel comp plan.
In the past I would survey my peers and recruiters to determine salary rates. With today’s Internet, there are locations that list industry salary ranges--one of the easiest methods is still to check the job boards
and see what companies are willing to pay. You may wish to check the internet search engines for “salary.” There were dozens of surveys available the last time I checked.
Employment Contracts
Disclaimer: This is not legal advice, but practical advise (my opinion) to help achieve financial and security objectives. Please consult an attorney to discuss the legal
implications.
Most companies prefer to maintain the “at will” relationship which allows companies to hire and fire at will--it also allows an employee to “walk at will” (although there may be some stiff handcuffs). However, in the
at will relationship, companies often run lopsided agreements and attempt to tie up employees with “golden” handcuffs that are not so “golden.” For example, they retain their “at will” status, but then seek to
enforce a non-compete clause, a nondisclosure clause (including not discussing that you even had a clause), repayment of relocation clause (sometimes even if fired), plus clauses that prohibit stock vesting if
released even a day before the prescribed time. In return, they offer you employment.
In the past, employment was a two way commitment. However, it today’s economy, corporations (which can be referred to as “cold steel buildings” - not flesh and blood) are forced to set aside loyalty to employees for
stockholder profitability. As a result, corporations are not able to look after their employees and employees must ensure their own security. One way to do this is to create an employment agreement.
The most important agreement that employers want is a time and confidentiality commitment. The most important agreement that most employees want is job security, or better yet, financial security--even if they leave
or are let go.
The Offer Letter
The first agreement most employees face is the offer letter (which states the benefits and stipulations of employment). According to John Lucht, in his book, Rites of Passage at $100,000+, says, “...everytime you start a new
job, you can have an employment contract...even if you don’t receive a paper with the term “contract” on it.”
The offer letter can be the most valuable contract you obtain. I recommend that you never accept a position without having the company (small or large) put your offer in writing. Companies will seldom commit to a 3-5
year contract, but they will often enable a 6 to 12 month severance, or a “12 month advance notice.” In addition, the offer letter can stipulate reporting structure, that there will be no relocation, guaranteed
salary and title, cliff vesting upon change of control of the company (or reporting structure), etc. I would highly recommend John Lucht’s book! (it contains samples that you can model)
Personally, I prefer a well written “counter” offer with termination agreements rather than a contract--I usually get more benefits out of it (since I can bypass the attorneys), and the terms can last longer (ten
years down the road your severance is based on the salary at that time, not when you started).
Formal Contract
Formal contracts typically spell out every stipulation and should always be reviewed by a seasoned, practicing employment attorney. These formal agreements are rare unless you are the CEO, or an officer of a company
that was acquired. A good attorney can provide advice such as the following (shows some fixes that were made by an attorney during one of my contracts):
- The “company” has been defined as the company, its subsidiaries (including partially owned), and its alliances. This would make it impossible to compete afterwards with half the industry which is certainly not
the intent, but the “too broad” definition can be constraining later.
- You can limit the non-compete to the specific product line at that time--eliminating a clause that prevents competing with everything a company is involved in (i.e., a generic non-compete with IBM could exclude
you from half the high-tech industry, versus a non-compete with just the product line (pc laptops) that you will influence).
- Removing clauses that are vague, such as “for cause.” This should be spelled out and agreed to.
- Bonuses should be tied to specific deliverables that must be decided and signed within 4 weeks of employment or the bonus is granted by default.
These are some of the helpful tidbits that a good attorney will help you resolve and negotiate.
The main point is to ensure that you are properly protected and have some form of security as part of your employment--if you are a “good” marketing person, you will often have to buck the “engineering” or
“accounting” driven trends to do what is right for the company--in spite of itself (and you need protection to ensure that you don’t wimp out and back down, afraid for your job, when you should be in the battle to
do what is right).
New. Registered users now have access to a very comprehensive sales comp plan (contains samples, policies, concepts, plus a sales tracking spreadsheet to optimize activity and skills of your sales team.
Resources for Compensations Plans
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