Inaugural CropLife Compensation Survey: More Than A Paycheck

We have all heard that “employees are a company’s most valuable asset.” And for most organizations, in particular agricultural retailers, employees also represent one of the largest expenses. In an ideal world, managers could pay each employee more without any worry about the cost or budget implication; but we live in a world of trade-offs and a delicate balance has to be struck.

To begin understanding this balance, the Center for Food and Agricultural Business at Purdue University and CropLife magazine, with consulting support from employment and recruitment firm Ag1Source, have partnered to develop the 2014 Retailer Compensation Survey. Col­lecting responses from nearly 150 agricultural retail locations across the country, this survey — which focused on salespeople and applicators — was designed to help top level managers to understand employee compensation and the utilization of various human capital management strategies.

The survey was conducted earlier this spring and these are the earliest results. This article provides insight into compensation for salespeople and applicators.

Compensation, Commissions, Bonuses

One of the most basic forms of compensation is the base salary, commissions and bonus. Collectively, these can be thought of as the take-home portion of a paycheck. The survey asked respondents to fill out the highest, average and lowest base salary, commission and bonuses paid by their organization.

For salespeople, the mean average-base compensation was $59,427 with the mean for the lowest and highest reported at $44,792 and $66,751 respectively. Of particular interest is the commission and bonuses. The mean average-commission and bonus was $16,194 and $7,496, respectively. Together, the average commission and bonus are valued at $23,690, or nearly 40% of the average-base salary.

While the base salary, commission and bonus structure can take several forms, it is important to consider how much the commission and bonus make up the base salary. If employees have adjusted to living standards that are 40% higher than their base salary, what happens when performance metrics are not met — for individual-specific reasons of a turn in the general agriculture economy — and that additional salary bump is not fully realized?

Applicator base pay rate was reported in dollars per hour (as a quick conversion to an annual salary, we used 2,000 hours per year). The mean ranged from $13.89/hour at the lowest to $18.58/hour at the highest; the average was $15.90/hour. When reporting applicator bonuses, typically paid on a per-acre applied structure, we found that the mean bonuses ranged from 38 cents/acre to 49 cents/acre, with an average bonus of 43 cents/acre.

Slicing the apple a little differently, application bonuses were also reported based on the type of application. Spreading lime or dry fertilizer was the lowest bonus application at 37 cents/acre. For the more challenging applications — dealing with a planted or standing crop — the bonus was slightly higher. Spraying pesticides (preemerge and postemerge) and foliar fertilizers were both reported at an average of 53 cents/acre.

While the applicator bonuses initially seem small, it is important to keep in mind the rate at which applicators can cover the ground. For example, applying pesticides at an average rate of 50 acres per hour would generate in a bonus equivalent of $26.50/hour — which is substantially higher than the average base salary of $15.90/hour.

Additional Compensations

Beyond the take-home portion of the paycheck, there are other important considerations, especially retirement. When asked about 401K and retirement contributions, 51% of responding organizations indicated that they contributed. Those contributing reported an average contribution rate of 6.2% of the salespersons’ base compensation. Those offering 401K or other retirement contribution to applicators represented 43% of respondents with an average contribution rate of 4.5% of base salary.

A second form of additional compensation investigated was profit sharing. Thirty-six percent of respondents reported sharing profits with their employees. For salespeople, the profit share was equal to 9% of base compensation. Applicator’s profit share was equal to 14% of base compensation.

Keep in mind that rates were reported as a percentage of base compensation. If an organization were to offer a uniform profit share across the entire organization, applicators — given a lower base salary — would have a higher reported bonus. For example, a profit share of $4,000 for all employees would be relatively smaller (as a percentage of base salary) for a salesperson making $50,000 base compensation (8%) than an applicator making $30,000 (13%).

Mike Smith, CEO of Ag1Source, asserts that retailers should not under-estimate the value that sharing some of the profits with all of the employees may have. “They will see a positive connection between the overall missions and objectives of the company and the resulting success. The implementation rule is, keep it simple and communicate progress along the way.”

Perks

Employers can provide various “perks” to make the work-life more enjoyable. A few of interest in this survey were cellphone compensation plans and policies for a salespeople’s use of vehicles.

Cellphones are critical to our current personal and work life. Their reliability and convenience has made them a necessity. Fifty-one percent of respondents indicated they paid a portion of salespersons’ cellphone plan. For applicators, only 37% of respondents reported paying a portion of employees’ cellphone plan. The survey did not ask about those that provide a company-issued cellphone to employees, which is likely a significant percentage.

The second perk we examined was the vehicle policy for salespeople. Sixty-nine percent reported they have a formal vehicle policy that allows for blending of a vehicle between company business and personal use. The most common type of arrangement, used by 38% of those with a vehicle policy, was allowing the use of a company vehicle for personal use at no charge, or with an income adjustment to the salesperson. For this arrangement, consider how difficult it would be for a salesperson looking at another job to consider life without this company vehicle. The Survey did not ask about organization offering the use of company vehicles for only company business.

Employee Development, Reward

While not felt directly in the employee’s paycheck, additional benefits through award trips, technical training and professional development are important for recognizing past performance and preparing for future employee success.

Employee reward trips were the least commonly offered and most expensive. Only 27% of respondents reported offering these trips to salespeople. The average cost of the salesperson award trips was $2,037 per employee. For applicators, only 15% offered the reward trips at an average cost of $1,034 per employee.

Technical training of salespeople and applicators was much more common. For salespeople, 61% offered technical training at an average cost of $1,629 per employee. A similar percentage offered technical training for applicators, 56%, but the average cost per employee was significantly less — $763 per employee.

A gap was observed for professional development. More than half of organizations (57%) offered professional development for salespeople. In comparison, only 35% offered the development opportunity for applicators. The average cost of professional development was $1,530 per employee for salespeople and $909 per employee for applicators.

In the second article from the survey, organizations were asked to report how many positions they plan to rehire in the next five years. The answer: A lot! Professional development and technical training can be an important tool for getting new employees up to speed. Organizations facing a lot of new hires will likely want to consider how they can increase their training and development efforts.

Other Notes

Another area of interest from the survey was how salespeople spend their time in addition to selling. The results are as follows:

  • 26% Field Scouting
  • 20% Seed/Fertilizer Delivery
  • 18% Operating Application Equipment

At 26% of their time, field scouting is the non-sales activity that salespeople do the most. While none of these activities alone consume a majority of salesperson’s time, collectively they represent more than two-thirds, or 64%, of the salesperson’s time. This allocation might be appropriate in some cases, especially for smaller retailers, but managers should think strategically and carefully about their organization and the implications for how their salesforce spends its time.

A final note to make on sales commissions: Earlier, it was discussed how a significant proportion of a salesperson’s take-home pay can come from commissions. In some cases, the commission can be larger than the base compensation. To understand what goes into the commissions, respondents were asked to report which sales activities generated the commissions. The results below show the activities and share of total commissions each generated across the organization:

  • Seed 44%
  • Crop Protection 25%
  • Fertilizers 22%
  • Precision Ag 6%
  • Custom Application 4%

By far, the largest source of agricultural retail commissions is from seed sales. Ninety percent of retailer commissions come from seed, chemical and fertilizer sales. Retailers and managers, especially those concerned about a salesforce that is reliant on commission, should measure and watch this closely. While making an individual sale is the responsibility of the salesperson, managers need to provide as much support as possible, such as programs to gain market share, organizational sales programs and initiatives, to make sure their organization can help its salespeople close the deal as often as possible.

Ultimately, the 2014 Retailer Sal­ary Survey work confirms our initial suspicion that offering a competitive compensation package to highly valuable employees is a delicate balance. While several considerations weren’t considered in this survey — flex-time, overtime pay, workplace benefits, vacation/sick/leave policies and general organization rule and policies — we hope this research will be of value to the managers looking to recruit the top-talents sales and application salesforce.

Topics:

Leave a Reply

Employees Stories

Guy being interviewed
EmployeesThe Importance Of Understanding Employee Behavior
March 1, 2017
People-related issues can tear at the fabric of a company. They chip away at even the most solid foundation built on Read More
Employee Interview
Employees1 Simple Step To Hiring And Retention In Ag Retail
February 2, 2017
There are three significant trends pertaining to the ag industry workforce which merit consideration: A growing shortage of qualified workers, Read More
AgHires.com
EmployeesAgHires Launches Redesigned Job Board, Recruiting Platform
November 8, 2016
In an effort to better serve job seekers and employers in and around agriculture, AgHires has launched its new redesigned job Read More
EmployeesOABA Program Develops Future Generation Of Agribusiness Leaders
September 29, 2016
The Ohio AgriBusiness Association will select up to 25 promising leaders to participate in a leadership enhancement program early next Read More
Trending Articles
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Agriculture
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Case sprayer nozzle closeup
EquipmentSpray Application: A Nozzle Renaissance
May 2, 2017
If you had asked four-decade ag veteran Mark Bartel, President of Wilger Inc., just a few years ago what lay Read More
ManagementWashington Update, Dow-DuPont Earnings, and the Passing of an AGCO Legend
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Latest News
Eric SfiligojMonsanto ‘Picks Its Battles’ by Nixing Deere Deal
May 23, 2017
Having been in the trade journalism game since the mid-1980s, I remember several watershed moments during my career. One of Read More
FungicidesSyngenta Launches New Seed Treatment Fungicide
May 22, 2017
Syngenta has announced the launch of PLENARIS seed treatment fungicide for the control of downy mildew in sunflower. PLENARIS contains Read More
Corn close up
Crop InputsMonsanto’s First HPPD Herbicide Garners EPA Appro…
May 19, 2017
Monsanto announced today that EPA has federally approved Harness MAX Herbicide, the first herbicide in the Monsanto portfolio to provide Read More
ManagementPrecision Planting Deal, China Developments, and Enviro…
May 18, 2017
Editors Eric Sfiligoj and Dan Jacobs discuss the latest news on John Deere’s now dead deal for Precision Planting, China’s Read More
Soybean aphid leaf
InsecticidesMulti-state Research Reveals IPM Best Option for Treatm…
May 17, 2017
About 89.5 million acres of soybeans will be planted across the U.S. in 2017 — a record high, according to Read More
GROWMARK-2017-Interns
CropLife 100GROWMARK Names 2017 Summer Interns
May 16, 2017
Forty-two college students are exploring agricultural career opportunities this summer as GROWMARK interns. They are working at FS member cooperatives Read More
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Ag…
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
Flooded corn in Indiana
FertilizerBoth Wet and Dry Conditions Threaten Nitrogen Loss
May 15, 2017
The weather is notoriously unpredictable, leading to challenges for planting, harvesting and applying the nitrogen (N) your corn crop needs. Read More
farmer Kip Tom
Precision AgAg Tech: On the Cusp of Something Big?
May 15, 2017
The investment and ag-tech sectors’ continuing courtship of agriculture, smoldering for three or four years now, was well in evidence at Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Greg Musson, Gar Tootelian
ManagementOpinion: Shaking Your Perspective in Ag Retail
May 12, 2017
Some of you I’m sure have encountered our recently retired salesman extraordinaire, Dan Bellanger. He worked in the industry for Read More
Exterior view of CPS Big Lake facility which includes enclosed receiving and load out area
CropLife 100New Alternative Weed Resistance Traits Could Experience…
May 12, 2017
It wasn’t too many years ago that ag retailers and their grower-customers could hardly wait for new options to fight Read More
Diane Allemang and Dan Jacobs
Crop InputsFMC Agricultural Solutions, Casa Pacifica Partner to He…
May 11, 2017
FMC Agricultural Solutions is teaming up with Casa Pacifica Centers for Children and Families, an organization that supports vulnerable children Read More
UncategorizedWhat’s Up With ARA
May 11, 2017
CropLife Editor Eric Sfiligoj talks with Brian Reuwee regarding what issues are on the docket for the Agricultural Retailers Association. Read More
BASF Maglis tablet retailer grower
Precision AgQ&A: What BASF’s Latest Foray into Precision …
May 11, 2017
In late April, BASF agreed to acquire U.S. precision ag player ZedX, a leader in the development of agronomic weather, Read More
Pam Marrone
Crop InputsMarrone Bio Innovations Enters into Distribution Agreem…
May 11, 2017
Marrone Bio Innovations, Inc., a leading global provider of bio-based pest management and plant health products for the agriculture markets, Read More
Bayer
Crop InputsBayer to Sell Liberty Business to Seal Monsanto Deal
May 8, 2017
Bayer has agreed to sell its Liberty herbicide and LibertyLink-branded seeds businesses to win antitrust approval for its acquisition of Read More
Trump, Senate, Cabinet
LegislationTrump’s EPA Appointee Dismisses Half of Major Sci…
May 8, 2017
(Via NYTimes.com) EPA has dismissed at least five members of a major scientific review board, the latest signal of what Read More