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

EmployeesAsmark Institute Dedicates New Training Center To Ford West
August 6, 2014
The Asmark Institute plans to recognize the retired industry leader's years of service to the fertilizer industry at the new state-of-the-art facility in Owensboro, KY. Read More
EmployeesSyngenta: ‘Take Charge’ Of Farm Safety
June 4, 2014
Syngenta and health officials warn of four health-related challenges in agriculture and how they can be managed. Read More
EmployeesHead Start Program Prepares The Next Generation Of Ag Retailers
April 7, 2014
Illinois Fertilizer & Chemical Association, in partnership with the Asmark Institute, are offering the Head Start Program to prepare students for work at ag retail facilities. Read More
EmployeesThree Keys To Employee Success
March 3, 2014
Increasing employee performance becomes much easier when managers follow these three simple things. Read More

Trending Articles

HerbicidesAdjusting To The New Reality Of Weed Control
November 4, 2014
Even with new cropping systems being readied for market introductions, weed control will remain a challenge for many. Read More
StewardshipResponsibleAg Begins Auditor Training
October 31, 2014
ResponsibleAg auditor training is now underway at the Ford B. West Center for Responsible Agriculture in Owensboro, KY. Read More
InsecticidesNew Research Study Shows The Value Of Neonics
October 29, 2014
The study evaluated seed treatment, soil and foliar uses of neonicotinoid insecticides in the U.S. and Canada. Read More
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communities
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Seed/BiotechUnapproved Genetically Modified Wheat Found In Montana
October 3, 2014
USDA reports that one year after discovery of Monsanto's unapproved wheat in a single Oregon field disrupted U.S. wheat export sales, the GMO wheat has again been found in Montana. Read More

Latest News

soybean field
Crop InputsABM Patents Microbial R&D Technique
November 25, 2014
Focused Microbial Diversity (FMD) is a newly patented technique employed by Advanced Biological Marketing (ABM) to research and develop microbials that will be used in ABM products Read More
Crop InputsStorage Options Help Grain Growers Go To Market
November 24, 2014
While on-farm storage in a traditional upright storage bin is one possibility for storing grain, it may not be for everyone. Read More
Eric SfiligojGiving Thanks For Another Great Year
November 24, 2014
As Thanksgiving Day 2014 arrives, agriculture has plenty to be thankful for. Read More
Crop InputsSyngenta Cost-Cutting Program To Affect 1,800 Jobs
November 24, 2014
The company's Accelerating Operational Leverage program will result in job reductions and relocations totaling around 1,800 across the company, the majority of which will occur in 2015. Read More
EquipmentAGCO Announces Operator Of The Year Finalists
November 20, 2014
Four custom applicators have been selected by AGCO Application Equipment as finalists for 2014 Operator of the Year, an honor that recognizes them as being among the top professionals in their industry throughout North America. Read More
MicronutrientsH.J. Baker Expands Tiger-Sul Business
November 20, 2014
H.J. Baker has created and filled two strategic positions in business development and sales within its Crop Performance Division. Read More
soybean field
FertilizerGeneral Mills Honors United Suppliers For Nitrogen Opti…
November 19, 2014
United Suppliers winning proposal detailed SUSTAIN, a consulting network that provides customized products and services for farmers using a needs-based system approach. Read More
EmployeesOhio AgriBusiness Association Awards $25,000 In Scholar…
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
ManagementServi-Tech Names New CEO
November 17, 2014
Servi-Tech has named Greg Ruehle its new president and CEO. Read More
CropLife 100Pinnacle Ag Acquires Colorado Aerial Application Outlet
November 17, 2014
Ft. Lupton, CO-based Reck Aviation — a full-service chemical application company providing aerial crop applications of fertilizers and crop protection products — will operate as part of Pinnacle's AgOne Application Services brand. Read More
Eric SfiligojMcDonald’s Message: Biotech Crops Scarier Than Cancer
November 17, 2014
Despite their potential health benefits, one of the world’s largest potato users will pass on a new biotech offering. Read More
MicronutrientsWinField Releases 2014 NutriSolutions Results
November 14, 2014
A number of significant regional and national crop deficiency trends emerged from the 2014 WinField NutriSolutions tissue sampling program. Read More
FertilizerH.J. Baker Opens Chinese Production Lines
November 14, 2014
The occasion was the official launch of the Tiger-Sul sulphur Bentonite production line of two much anticipated fertilizer products in China, T90CR sulphur fertilizer and TZinc micronutrient enhanced sulphur fertilizer. Read More
ManagementOhio Certified Crop Adviser Program Accepting Nominatio…
November 14, 2014
The award recognizes an individual who delivers exceptional customer service for farmer clients in nutrient management, soil and water management, integrated pest management and crop production in Ohio. Read More
HerbicidesSyngenta Announces Acuron Trial Plot Results
November 14, 2014
Acuron was tested at 167 trial locations across 35 states. Trials included 95 Syngenta locations, 54 university locations and 18 distributor locations. Read More
Crop InputsVerdesian Expands Sales Force
November 13, 2014
The new sales representatives will work with growers, retail partners and distributors to oversee technical training and product education. Read More
EquipmentAGCO Raises $100K For Wounded Warrior Project
November 13, 2014
AGCO Corp. partnered with local AGCO dealers across the U.S. and Canada to raise nearly $100,000 in support of wounded service veterans. Read More
HerbicidesDow AgroSciences Announces Launch Of Enlist Duo Herbici…
November 12, 2014
It will be launched in conjunction with a stewarded introduction of Enlist corn, and seed production of Enlist soybeans in 2015. Read More