TechSelect VARs Get Creative With Employee Compensation

Tech Data's TechSelect organization held a breakout session for its members at the TechSelect conference in Rancho Mirage, Calif., that allowed them to share best practices and problems.

"It was real interesting to hear how other people are doing things. It opened my eyes to some areas," said Duncan Alexander, principal and vice president of Alexander Open Systems, a Lenaxa, Kan.-based solution provider.

For example, Alexander Open Systems has grappled with how to handle spiffs, Alexander said. He said he believes the vendor-driven rebates may entice employees to focus on selling specific products as opposed to a solution.

"We don't allow spiffs to come to individuals. We do them as a company and give away points, and at Christmas we allow the employees to buy stuff," Alexander said.

In addition, Alexander Open Systems lowered base salaries but increased employees' bonus structure. The move has resulted in higher productivity and improved morale, Alexander said.

"We make it more dependent on them. Now they have to be more positive when they go on-site. They look for more sales opportunities that involve services to get more billable hours," he said.

Corporate Technology Group, a Missoula, Mont.-based solution provider, lowered his salary overhead from $130,000 per month to $60,000 per month and implemented quarterly bonus incentives.

"We did it quarterly so that if you have a bad month, it wouldn't have as much of an effect as a quarter. Everyone has good months and bad months," said Curtis Jacobson, president and CEO.

The solution provider also extended the bonus structure to every employee, including receptionists, who receive bonuses based on the company's overall results.

"They are the first contacts to customers sometimes. They all impact customer satisfaction one way or another. We're trying to figure out how to create value for everyone," Jacobson said. "We also have the purchasing people evaluated by the salespeople. That [purchasing] person affects their lives. If you don't have a happy purchasing person, you're not going to have happy salespeople."

Ken Colton, director of operations at Polar Systems, helped the Portland, Ore.-based solution provider implement a new compensation strategy that lowered engineers' average salary by $10,000 by awarding more bonuses.

"We increased their own leverage to make more money," Colton said. The effect also gave the company a higher-caliber bevy of talent because weaker employees left the company, he said.

"I'd rather have two highly qualified salespeople than six stepping over each other," he said. "Now we have some stars that know when the economy revs up, instead of making $60,000 or $70,000 they can make $100,000 or $120,000," Colton said.