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Ask the Expert: Partner and Alliance Manager Compensation

Guest post by: Sarah Gerdes

Article Overview: The debate continues to rage about the best compensation structure for partner managers. Recently BMG sat with a round table of chief executives, financial and alliance officers to discuss the merits behind the plethora of compensation structures available. The group didn’t agree on salary figures, commission percentages or bonuses, yet they did agree on one thing: the compensation structure MUST create the right motivation and this falls into two camps: strategic or tactical.

Ask the Expert: Partner and Alliance Manager Compensation

As a general rule of thumb: the younger the company, the more weighted on bonus and commissions, whereas the more mature the company more weighted on the salary.

Base Salary
A typical base salary for someone with 4-7 years experience is $65-75,000 depending on local economic market factors. For someone creating corporate partner strategies, product line partnerships and manages a diversified partner taxonomy, or in other words, has the skill to manage all types of partnerships, the number easily starts at $95,000 and continues upwards depending on experience.

Commissions
Commissions and bonus are paid when the partnership goals of the company carry a specific quota for the year and can be measured and validated. For example, a company desires to achieve $10M in revenues and partnerships must deliver 50% of this number. The individual contributor compensation receives commissions on the five million dollars, and has a bonus attached with exceeding this amount.

Where Sales and Partner Management Meet
For a partner manager to receive commissions or bonuses, it is best to use a sales compensation structure model. In the partner development world, commissions and bonuses (C & B) are typically provided for:
a) channel managers
b) strategic partner managers and
c) day-day partner managers

The scale and weighting is weighted in favor of commissions when the goal is to drive consistent revenues. Bonuses tend to be attached to strategic initiatives such as long term OEM (private-label), licensing or product oriented joint manufacturing agreements, or consulting practice investments. This ensures a proper balance between the strategic-longer and tactical-short term challenge that most partner managers face on a daily basis. If management does not equally equate commission and bonuses, the company will lose out on either side.

One Size Does NOT Fit All
The group could not agree on the best bonus or commission fees to pay. This is usually up to the CEO but tends to follow very closely with the commissions of a sales executive, if not a bit lower. Another rule of thumb: At the very least, salary should comprise no more than 60% of the total pay package if you want to really incentivize the individual. This is also the case if the product line and company are somewhat established (i.e. product has been on the market for a year or so). Otherwise, it’s nearly impossible for the manager to make any money above and beyond the base salary.

For more information on partner development topics and tools, visit www.bmginc.com, or www.MyBizHomepage.com/Education for free tools.

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