Barnes Dennig’s 11th biennial Wholesale/Distribution Compensation and Benefits Benchmarking Study is now available as a tool to compare your company to others. As part of a company’s strategic planning process, benchmarking industry data against your own can be a valuable tool to assess your position against others in the market. Benchmarking identifies gaps, both positive and negative, that may require further research. Analysis such as this should be coupled with SWOT (strengths, weaknesses, opportunities, threats) analysis and an ongoing, ever-changing, evolving business plan, especially as your company grows.
Planning for the Future: Combating Wholesaler Concerns
Companies experience different life cycle stages from creation, growth and maturity to decline, and even death. Once a company has achieved maturity, it can reinvent itself through people, products, innovation, expansion, or contraction. A path or vision during this time can be achieved through strategic planning. During rapid growth, companies experience challenges such as managing the growth while retaining the original entrepreneur’s vision. Another challenge may be a movement to professional management or a transfer of management to a new generation when the company founder is ready to retire. Economic conditions and the regulatory environment also strongly impact how a company performs. So with both internal and external pressures on a company, proactive planning in times of both prosperity and decline can be essential to a businesses success.
This study is poignant because employee healthcare costs followed by employee retention topped the issues that distributors were concerned about in 2014. Furthermore, over 51% of the companies anticipate hiring additional employees in 2014. However, these same companies have not replaced 100% of the employees that were laid off during the recession.
Compensation Issues & Incentive Programs
The main compensation issues faced by wholesale/distribution companies are employee costs, skills gaps and developing incentive programs. The companies primarily address the skills gap by conducting internal training and development programs. The next tier of addressing the skills gap is met in three main ways : collaborating with colleges and universities, collaborating with vocational schools, and outsourcing. Some wholesale/distribution companies have identified their way of dealing with the skills gap is by doing nothing.
The development of incentive programs is an ever-changing process. Inside sales do not typically have incentive-based compensation, or it is a much lesser amount of compensation for those employees. They are more typically compensated with some type of bonus program. Whereas outside sales are moving toward greater amounts of compensation being composed of incentive-based compensation. Some relationship to gross profit is the main method that is utilized. Companies are constantly changing their compensation and bonus structure. They are also implementing developmental incentive programs that are related to goal achievement to drive employee behavior.
Some methods for doing this include developing a strategic plan and define how employees fit in, developing best practices expectations and accountability, determining required shareholder return and don’t pay bonuses until the target it reached or benchmarking what other companies are doing. All in all each company must find what works for it and its culture.
Barnes Dennig’s 2014 Wholesale/Distribution Compensation & Benefits Benchmarking Study is one way to measure your Wholesale/Distribution company against other regional wholesale/distribution companies. To request your own copy of this study, please contact us today.