Fair Wages?

While a wealth of compensation plans are currently in play for today’s kitchen and bath designer/salespeople, the end result for many still includes long hours and less-than-stellar salaries – especially among women in the field. However, on the positive side, more kitchen and bath dealerships seem to be offering medical benefits and flexible hours than in years past.

These were the findings of a new compensation survey, in which Kitchen & Bath Design News polled more than 250 kitchen and bath designer/salespeople from across the U.S., looking at salary, benefits, commission structure and more.

If the survey is any indication, designer/salespeople seem to be struggling financially, with more than a third of those surveyed (35%) reporting that they are currently making less than $50,000 a year (see Graph 1). Even more disturbing was the clearly defined salary gap between the genders – of those making less than $35,000 per year, a whopping 90% were female. By contrast, 100% of those making over $250,000 per year were male, suggesting that the gender gap is alive and well in 2007.

Of those surveyed, 31% reported earnings in the $50,000-$75,000 per year range, 17% said they were earning $75,000-$99,000 per year, 12% were bringing in $100,000-$149,999 annually, and 5% were earning in excess of $150,000
per year.

Benefits

When it comes to benefits, the good news for designer/salespeople is that dealerships offering medical coverage seem to be on the rise. In fact, 80% of those surveyed said they receive medical insurance as part of their benefits package, compared to 60% in a similar survey done five years ago.

Unfortunately, this seems to be the only benefit the majority of those surveyed receive. Less than half of those surveyed (48%) had a company 401(k) plan, while 46% received dental insurance, 43% garnered an end-of-year bonus, 39% received life and/or disability insurance, 22% had profit sharing, 21% enjoyed use of a company car and 8% received stock options (see Graph 2).

Still, while the majority of those surveyed are not receiving a host of benefits, the percentage of designer/salespeople receiving dental insurance, a 401(k) plan and an end-of-year bonus was still up significantly from reports from a similar survey done in 2002.

Also interesting to note was that some 13% of those surveyed reported receiving “other” benefits – including cell phone expenses, gas and mileage allowances and flex-time, among others – which is nearly four times the number of employees who reported receiving such extras back in 2002. While the rapidly rising cost of gas may account for some of this, it also appears that dealerships are recognizing the importance of offering flexible benefits and schedules to retain valued designer/salespeople.

Figuring Commision

When it comes to determining how designer/salespeople are paid, the number and type of plans vary widely. As noted kitchen and bath consultant Hank Darlington explains, “In the kitchen and bath industry, there are almost as many commission programs as there are businesses.” Darlington relates several common commission plans in his “Personnel” column this month (see related story, Work Compensation Strategies and Examples).

Among those surveyed, the most common compensation plan was one that blended salary and commission. Indeed, 38% of those surveyed had a pay structure that included both a set salary and a commission element. Additionally, 22% said they are paid straight salary, 19% noted that they are paid strictly by commission, 15% reported that they are paid an hourly wage and 6% said they receive some other compensation package (see Graph 3).

More than half (53%) of those surveyed who are paid on commission said their commission is figured on the gross profit of jobs sold (see Graph 4). Another 22% said their commission is figured on the sales volume of jobs sold, while 20% noted their commission is calculated on the net earnings of jobs sold, and 5% said their commission was figured in some other fashion.

Of those paid by commission, 65% of designer/salespeople said they are paid on a sliding scale (see Graph 5). That means the percent of commission they make varies by how much volume they sell. By contrast, 35% said they are paid on a fixed scale, which means the percentage of commission remains the same regardless of how much or how little they sell.

While most designer/salespeople interviewed expressed a preference for a salary-plus-commission compensation plan, many felt that their existing percentage of commission was too small to give them the ability to reap the benefits of their sales successes. As one noted, “While a salary is nice in that it provides security, there’s not a lot of incentive [in my compensation plan] for growth. Even when I do a lot of big jobs, I don’t see a lot more money – though I do end up with plenty of extra work!”

They Work Hard for the Money

Indeed, long hours was a complaint that was heard from many of those surveyed, with nearly two-thirds of respondents (63%) saying they currently work between 41 and 60 hours a week, and another 9% saying they work more than 60 hours a week (see Graph 6).

Additionally, most said they are constantly answering client e-mails and phone calls from home, and several lamented “this technology era, where, by virtue of having e-mail and cell phones, people now feel they are entitled to reach you any time of day or night.”

Neither do most designer/salespeople believe all those extra hours translate to extra dollars. While the majority expressed the feeling that they are working more hours than in the past, less than half (47%) said they expect their salary to be higher this year compared to 2006 (see Graph 7). Some 44% said they expect to earn about the same as last year in 2007, and 9% said they believe their earnings will be less than they were in 2006. This is true despite the fact that 77% said they had received a raise within the last year.

While this might suggest that salary losses are all on the commission side, which would seem to seem to indicate a slowing of sales, several designer/salespeople believe the problem has nothing to do with a lack of jobs. Rather, it’s about individual jobs not being profitable enough, they say.

As one survey respondent explained, “It’s not about loss of business. We’re still getting a ton of remodeling business. But you have too many clients who are price sensitive, they shop the Internet and then want to know why they can’t get that deal they saw on some Internet site, not understanding that someone has to measure these things, and install them, and make sure the job is done right...clients still have a hard time understanding the value of that whole package. So they quibble over the price of things, not understanding that it’s not just things they’re buying, it’s the service and security of knowing it's going to be done right.”

Designer/salespeople surveyed also reported a preference for staying at one firm and growing, rather than bouncing around from job to job. In fact 42% of those surveyed said they’d been in their current position for 10 or more years, with another 20% saying they had held their current position for 5-9 years (see Graph 8). Only 8% of those surveyed said they had been at their current job less than a year.

Likewise, some 40% of those surveyed said that their tenure in the industry spans more than two decades, with another 27% saying they have been in the kitchen and bath industry for at least 10 years (see Graph 9). This makes the less-than-stellar salaries particularly of concern. As one designer/salesperson said, “You expect to really earn your worth as your experience level and talents grow, yet that doesn’t seem to be the case in this industry. The industry itself is wonderful and exciting, and I love the opportunity to be creative and do something meaningful, but it can be frustrating to do these $100,000 kitchens when that’s twice what you earn in a year – and then have to listen to these high-end clients complain about the cost!”

Factors Impacting Salary

So, if experience and tenure in the industry and even hours worked don’t seem to translate into increased salary, what does? While reported salaries among survey respondents were impacted by a number of factors – including size and location of dealership, annual sales volume of dealership and whether or not the designer/salesperson had a CKD or CBD certification – gender was the most significant factor impacting salary among those surveyed.

Indeed, it’s notable that of those designer/salespeople making less than 35K a year, 90% of these were female. This was true regardless of the fact that the median experience level for both gender groups was comparable, suggesting that the gender gap continues to be a problem in the design industry, just as it is in many other industries.

Likewise, at the higher end of the salary scale, male designer/salespeople outnumbered women, with men making up 56% of those earning $100,000-149,999, 67% of those earning $150,000-249,999 and 100% of those earning $250,000 and up among those surveyed (see Table 10).

While this may come as little surprise to most women – as of September 2006, women were earning only 77 cents on the dollar as compared to men, according to statistics from the U.S. Census Bureau – the salary gap remains a distressing reality for many of today’s designer/salespeople.

Another factor that had a notable impact on designer/salespeople’s pay scale was the Certified Kitchen Designer/Certified Bath Designer certifications. In fact, of those designer/salespeople making less than $35,000 per year, only 14% had a CKD/CBD designation (see Table 11).

By contrast, the highest percent of CKDs/CBDs fell in the $249,999 per year and up salary range, suggesting that having such a professional certification has a positive impact on salary.

Not surprisingly, higher salaries were also tied to location (those located near a major city made roughly 15% more than their rural counterparts, according to those polled) and annual sales volume of the dealership.

Desired Benefits

When asked about benefits they’d like to receive but don’t, a number of designer/salespeople cited the basics: health insurance (or greater company contributions to health insurance premiums), dental insurance, life and disability insurance, more sick and vacation time, a company matched 401(k) plan, profit sharing and bonuses.

But the old standards weren’t the only things employees were asking for. Clearly our high-tech society has impacted employees’ desired benefits, with many saying they’d like to have company paid cell phones and laptops. As one designer/salesperson noted, “I do so many presentations in people’s homes, and spend so much time in the field, I really need a laptop to be able to stay productive. Unfortunately, so far, my company hasn’t come through on that.”

“Laptops are critical so that you can work in the field,” agreed another respondent who said, “I’m rarely in my office these days, except late at night, and I end up answering e-mails at midnight. A lot of these are simple questions that could be answered without causing delays if we could just invest in laptops.”

The rising cost of gas has also led many employees to request gas allowances, or a company car for travel. As one rural-based designer/salesperson in the Midwest explained, “Things are very spread out here, so it’s not uncommon for me to drive an hour and a half to two hours to meet with a prospect in his or her home. This wasn’t so bad when gas prices were affordable, but now I feel like I’m spending half my salary in gas!”

Education, too, was a high priority among designer/salespeople surveyed. A great many cited their most-desired benefit as a budget for sales and product training and attendance at trade shows and seminars. Many others said they would like their company to offer more support in the process of getting certified.

Some of the benefits designer/salespeople desire are less tangible. Said one, “What I’d really like is better reps calling on us to help sell their products by supplying a good quantity of information and training.”

Added another, “I just want better leads. That would be the best benefit of all.”

Other designer/salespeople simply wanted their company to take out taxes and social security “so I don’t owe a fortune at tax time,” as one stated.

And yet another designer/salesperson said, “It’s really very simple. We just need more customers! We have no marketing plan, just word of mouth and traffic from walk ins, and it’s tough to build business this way.”

The salary gap between the sexes was evident in designer/salespeople’s comments, as well, with a number of female respondents saying their most desired benefit was “equal pay to what my male colleagues are making.”

Designer/salespeople also requested more money per hour for getting their certification, reasonable cost of living raises, bonuses based on commission instead of a fixed amount, support for entering design competitions, vision coverage, the option to carry over sick or vacation time, personal use discounts, paid association dues and a gym membership.

Does the latter sound like merely a pipe dream? It’s not for some designer/salespeople who are lucky enough to work for truly forward-thinking companies. As one such employee said, “I work for an awesome employer – they are putting in a company cafeteria and fitness center for us, and we get discounted tickets to area sporting events and theater. We are blessed to work for a company that takes good care of us!”

See how the results of this survey compare to KBDN’s compensation survey from several years ago.

In addition, to learn more about creating an effective compensation strategy from Personnel columnist Hank Darlington, read Developing a Compensation Strategy. and Work Compensation Strategies and Examples. And try reading Projecting Profits in a Softer Business Climate by Bettering Your Bottom Line columnist Ken Peterson, CKD.

To share your thoughts, log onto KitchenBathDesign.com and click on the Send a Letter to the Editor link at the top of the home page, or any other page of the site.

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