Service Leadership

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Due to high demand, we are extending the no-cost participation period for this year's Solution Provider Compensation Survey

A sampling of 2009 results and announcement of 2010 survey – participate now and save!

• Specific compensation ranges for more than 50 Solution Provider positions,
• Staff:management ratios,
• Owner and manager compensation,
• Incentive pay amounts,
• Hourly bill rate by skill set,
• And more…

In 2009, Owners earned on average 130% as much as the average manager in their organization. Next were Sales Managers, who earned, on average, 109% as much as overall management average compensation. Next were Applications Practice Managers, who earned 98% as much as the average manager, followed by Infrastructure Project Services Practice Managers who earned 8% as much as the average manager. The lowest earning power was evidenced by Managed Services Practice Managers, who earned an average of only 74% as much as the average of all managers; paradoxical considering the risk, complexity and probable strategic stock of Managed Services in comparison to other practices.

Figure 1 - Relative Compensation of Managers, 2009

Average compensation for Solution Provider owners dropped in 2008 and again in 2009, while compensation for their average employee increased! This occurred despite a low 0.4% increase in the Consumer Price Index in 2008 and a 0.4% decrease in CPI in 2009, its first decrease since 1955. In addition, as shown in Figure 1 – Comparison of Owner TAEs, Best-in-Class compensation for owners in 2009 placed them in the Top 5% of U.S. Households and exceeded that of national averages for Managing Attorneys and Family Practitioner Physicians.

Figure 2 - Comparison of Owner Targeted Annual Earnings, 2009

These are among many the eye-opening results of 2009’s  S-L Index Solution Provider Compensation Survey. Given the dynamic state of both the economy and the Solution Provider industry, this year’s survey will also contain valuable insight and helpful indicators for anyone responsible for employee compensation and for profitability.

Most well-informed Solution Provider executives know that the total amount they can afford to pay for service people, equates to their service revenue divided by 2.5 (Service Leadership’s now-legendary Multiple of Wages calculation). They also know they can only afford to pay sales people no more than 25% of the gross margin they generate. These best practices ratios set healthy boundaries, but they don’t address what the market pays, whether above or below the boundaries. However, it is also helpful to know what are the staff-to-management headcount ratios. These are shown in Figure 2 – Staff to Management ratios. In the typical Solution Provider of $2.4mm and 51% services:

• The Owner had 1.8 Managers reporting to him or her,
• The Sales Manager had 4.5 direct reports,
• The Infrastructure Projects practice manager had 6.7 direct reports,
• The Managed Services practice manager, as expected, had more people – 8.6 headcount – reporting to them.

Figure 3 - Staff to Management Ratios, 2009

Compensation of the management team showed some insightful patterns, as shown in Figure 3 – Relative Compensation of Managers.

To help you prepare your compensation changes for 2010, participate in this year’s Annual Solution Provider Compensation Survey and be among the educated few who make use of the industry’7s most complete and in-depth compensation benchmark. You’ll have the advantage of knowing:

• Total, base and incentive pay for more than 50 of the most common Solution Provider positions,
• Covering multiple sales, service, administrative and management roles, including:
• Infrastructure and applications technical professionals,
• Hunter, farmer and hybrid sales professionals, plus telemarketing,
• Finance and administration positions,
• Management in sales, service and administrative positions,
• Owners.

In addition, find out valuable detail such as the average customer bill rate and effective Multiple of Wages for the technical positions. For all positions, find out the degree of Recruitment Stress©, an exclusive Service Leadership measure of the level of difficulty and need surrounding the hiring of a given position.

Figure 4 - Salesperson Compensation Segmented by Company Size, 2009

The Annual Solution Provider Compensation Survey is used by leading Solution Providers to:

• Help them plan compensation changes for groups of employees and individuals,
• Educate managers and effected employees on market conditions,
• Anticipate costs of new lines of service business or additional sales capacity,
• And many more planning activities.

As you would expect, Service Leadership breaks these results down by company size, US Census region and by Predominant Business Model© to give you the most precise comparables for your business model. In addition, the top responding cities are broken out separately.

And, for the first time, this year we’ll be segmenting the results of by Predominant Business Model© to show you how the Solution Providers with your specific business model manage their compensation levels.

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