Salaries don’t go backward - Technical.ly

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Salaries don’t go backward

Employers experiencing wage inflation now won’t get relief in the form of rollback. Here's what managers should do as they wait for the high rate of growth to slow.

Written by Technically Media CEO Chris Wink, Technical.ly’s Culture Builder newsletter features tips on growing powerful teams and dynamic workplaces. Below is the latest edition we published. Sign up here to get the next one this Friday.


Salaries don’t go backward.

Employers experiencing wage inflation now won’t get relief in the form of rollback. Instead, the best case scenario for transitory inflation is that the recently higher rate of growth, especially in tech roles, will begin to slow.

That growth rate increase is no mirage, says Graham Collins, the chief of staff at QuotaPath, a sales commission tracking platform with dual offices in Philadelphia and Austin and a growing remote staff. Sales professionals, especially those in businesses that have grown during the pandemic, have seen their total projected compensation, or “on track earnings” (OTE), grow 10 to 25% year over year — without their accompanying quotas growing nearly at all.

That’s never happened before in the 20 years of the SaaS business model. A common rule of thumb for SaaS companies is that a salesperson’s quota, or their expected closed sales, should be five times their OTE. For example, a seller who earns $100,000 should be expected to bring in $500,000 — with high-performing salespeople doing better yet.

If you’re stressing the topic, this week Collins and QuotaPath CEO AJ Bruno are hosting a webinar on the topic, and Collins makes himself available for comp analysis.

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This ratio has become distorted in 2021. Sellers have negotiated for higher base compensation and more lucrative bonuses without being required to contribute a higher quota, Collins says. That won’t last. Base salaries won’t go backward, but quotas will begin to rise again.

When? That’s trickier. I’ve begun hearing employers rescinding offers to new candidates who increase their salary requests. One CEO withdrew an offer to a senior project manager who asked for an additional $50,000 late in the process. “Everyone is just taking their shot, and there are no consequences,” he told me. This is top of mind as many are developing next year’s budget. For all the attention that recruiting gets, prioritize your current employees first.

This creates a challenge, though. It’s unclear how sustained or widespread price inflation will remain. Budget bumps for your current team, and intend those to be a new permanent floor. Go too high without being able to increase revenue to match, and you may create a structural misalignment. Go too low and risk underinvesting in your current team. As ever, the best solution: Ensure managers have open communication with teammates, and focus on making yours a better place to work today than it was before. That, too, must only go one direction.

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