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

Employee Training Employees at Silverado Ranch Supply receive monthly training that focuses on how to read labels, handle hazardous materials, document use of hazardous and other materials, and actions to take in an emergency situation. Source: Lindsay Dixon, consultant, Silverado Ranch Supply, Yerington, NV
EmployeesTop 10 Employee Retention Mistakes
March 9, 2015
Ag retailers are constantly looking to please their best employees, but many err in how they attempt to retain them. Read More
Prairieland FS employees
EmployeesThe Three Keys To Employee Success
February 12, 2015
Everyone hiring in the agricultural markets has three major concerns to address. Read More
EmployeesOhio AgriBusiness Association Awards $25,000 In Scholarships
November 19, 2014
Each year, the Ohio AgriBusiness Association Educational Trust scholarship program awards scholarship dollars to students enrolled in an agriculture-related field attending several state colleges. Read More
EmployeesThe Importance Of Employee On-Boarding
September 4, 2014
A key component to employee retention is sometimes overlooked in the business. Here is a brief guide on how to implement and carry through with such a plan. Read More
Top 100 Articles
Crop InputsLand ‘O Lakes, United Suppliers Finalize Merger
August 24, 2015
According to a press release on August 24, owners of United Suppliers, Inc. and members of Land O’Lakes, Inc. “have Read More
West Central Cooperative, Jefferson, IA
CropLife 100Iowa Cooperatives To Explore Unification
August 19, 2015
The boards of directors at two of Iowa’s leading farmer-owned cooperatives yesterday signed a letter of intent to study the Read More
CropLife 100Southern States Coop Hosting Drone Flight This Friday
August 3, 2015
Southern States Cooperative — No. 9 on the CropLife 100 — is hosting an FAA-approved drone demonstration at Grandview Farms Read More
CropLife 100Aligned Ag Distributors Adds Four New Owners
July 30, 2015
Aligned Ag Distributors LLC has announced the addition of four new customer/owners to Franklin Holding Co. LLC. They are: The Read More
CropLife 100Pinnacle Purchases California-Based Specialty Crops Retailer
July 20, 2015
Pinnacle Agriculture Holdings has successfully acquired California-based NH3 Service Co.  Operating as part of Pinnacle’s Performance Agriculture brand, the new locations Read More
Asmus Farm Supply liquid fertilizer facility features 20,000 square feet
CropLife 100Slideshow: Asmus Farm Supply Shows Off Its New Liquid Fertilizer Facility
July 15, 2015
Asmus Farm Supply, Rake, IA, recently added a new liquid fertilizer facility to its company operations. The new liquid fertilizer Read More
Latest News
EquipmentDeere Announces Soucy Track Distribution Alliance
August 28, 2015
John Deere announces an alliance with Soucy Track to sell and distribute products through the John Deere dealer channel. “This Read More
FertilizerFall-Applied Phosphorus: A Rooted Investment
August 28, 2015
As commodity prices decrease and input prices continue to rise, farmers are seeking more efficient strategies for meeting a high Read More
Monsanto Sign
Crop InputsWhat’s Next For Monsanto, Syngenta?
August 28, 2015
After dropping its $47 billion bid to take over Swiss agribusiness firm Syngenta, Monsanto may be turning its focus to Read More
Golden Harvest Corn stalks
Crop InputsMonsanto: Syngenta Not The Only Horse In Crop Protectio…
August 28, 2015
Monsanto Co, having ditched an audacious $46 billion (£30 billion) offer for Syngenta AG, may downshift to a humbler strategy Read More
ManagementConsolidation hits and a miss; And a look at China’s ch…
August 28, 2015
As Monsanto suspends its pursuit of Syngenta, consolidation news at the retail and distribution level heats up. CropLife magazine’s Executive Read More
Corn Field
MicronutrientsHuma Gro Introduces New Boron Liquid Nutrient Formulati…
August 28, 2015
BORO-MAX, a new boron (B) 10% liquid nutrient formulation, has been added to the Huma Gro product line. This new Read More
Crop InputsNFU: Monsanto Decision To Withdraw Syngenta Bid ‘…
August 26, 2015
National Farmers Union (NFU) President Roger Johnson said the organization was very pleased by the news that Monsanto has withdrawn Read More
Crop InputsMonsanto Withdraws Bid For Syngenta
August 26, 2015
Monsanto Co. abandoned its latest effort to acquire Syngenta AG, the world’s top maker of pesticides, after a sweetened bid Read More
Syngenta Sign
Crop InputsSyngenta Comments On Monsanto Announcement
August 26, 2015
The Board of Syngenta confirms that it received a verbal proposal from Monsanto to acquire the company at a price Read More
Case IH Patriot 2250 Sprayer
EquipmentHigh-powered Case IH Patriot 2250 Sprayer Pushes Throug…
August 26, 2015
Engineered with more muscle, the new 660-gallon-capacity Patriot 2250 sprayer features best-in-class horsepower, along with the fuel efficiency that comes Read More
Crop InputsLand ‘O Lakes, United Suppliers Finalize Merger
August 24, 2015
According to a press release on August 24, owners of United Suppliers, Inc. and members of Land O’Lakes, Inc. “have Read More
TMX-2050 In-Cab Display Launch Run Screen
Eric SfiligojPrecision Ag Could Shine In Increased Spotlight On Agri…
August 24, 2015
By any measure, 2015 is turning into one of the most challenging years agriculture has ever experienced. All throughout good Read More
ManagementCrop Conditions In Minnesota and Traveling Time
August 21, 2015
Editors Paul Schrimpf and Eric Sfiilgoj discuss the crop outlook from a field trip to Minnesota and upcoming travel plans. Read More
HerbicidesREUTERS: Anti-GMO ‘Scientist’ Calls For New…
August 20, 2015
EDITORS NOTE: We feel that it is important to note that there are those that believe one of the lead Read More
Rendering of Syngenta Seedcare Institute expansion
Seed/BiotechSyngenta Announces Seedcare Application And Resource Ce…
August 19, 2015
Syngenta recently announced the Seedcare Application and Resource Center, a collaborative new website designed exclusively for Syngenta Seedcare customers to Read More
Winter Wheat
Industry NewsArysta LifeScience Announces Two New Regional Sales Man…
August 19, 2015
Arysta LifeScience North America recently announced Steve Vining and Phil Reding have each accepted new positions as Regional Sales Managers. Read More
West Central Cooperative, Jefferson, IA
CropLife 100Iowa Cooperatives To Explore Unification
August 19, 2015
The boards of directors at two of Iowa’s leading farmer-owned cooperatives yesterday signed a letter of intent to study the Read More
Golden Harvest Corn healthy leaves
Industry NewsAligned Ag Distributors Names Vice President, Crop Prot…
August 18, 2015
Aligned Ag Distributors LLC have appointed Warren Hragyil to VP Crop Protection. Hragyil comes to Aligned Ag Distributors LLC with Read More