How Does Your Compensation Measure Up?

Be sure to participate in the next Online Poll, which asks how kitchen and bath designers and salespeople are paid, online now.

How Does Your Compensation Measure Up?

While salary packages vary widely in the kitchen and bath industry, dealers and designers/salespeople are working long hours and many say they're not reaping the financial rewards for their labor. Still, most are optimistic about improvements in 2003.

A tighter economy has forced many kitchen and bath dealers not only to work longer hours, but to take on additional responsibilities and frequently cut back on benefits or become more creative in terms of packaging them in order to stay competitive.

For designers/salespeople, low salaries, long hours and a dearth of benefits are among the biggest concerns of the new millennium, particularly at low-volume dealerships.

However, despite this, more than half remain optimistic about seeing an improved financial picture in 2003, according to a recent compensation survey by Kitchen & Bath Design News.

Designers/salespeople, in particular, seem to be struggling financially (see graph 2), with nearly a third of those surveyed (30.3%) reporting an income of $35,000 a year or less in 2001. Another third (33.3%) earned between $35,000 and $49,999, while 21.9% earned between $50,000 and $74,999. On the higher end, some 8% reported making between $75,000 to $99,999, 4.5% earned between $100,000 to $149,999 and 2% made over $150,000.
Men generally earned more than women, with 44.3% of male designers/salespeople earning over $50,000, compared to 31.1% of female designers/salespeople.

Dealer income, of course, was considerably higher (see graph 1), with more than half (60%) of all dealers reporting a total income of over $75,000 for 2001, 35% earning over $100,000, and 20% earning more than $150,000 in 2001. At the higher end of the pay scale, male dealer incomes were more than double that of female dealer incomes, with 22.9% of male dealers surveyed reporting earnings of more than $150,000 for 2001, compared to only 11.2% of female dealers.

Additionally, 45.2% all designers/salespeople reported receiving a bonus in 2001, and more than half expected to see a bonus in 2002, with expected bonus amounts varying widely, running the gamut from a few hundred dollars to nearly $30,000.

Long hours were a common complaint among both dealers and designers/salespeople, with 86.3% of dealer/owners (see graph 3) and 67.8% of designers/salespeople (see graph 4) reporting working more than 40 hours per week on a regular basis.

Among both dealers and designers/salespeople, men were more likely to work 40+ hour work weeks than women, with 88.2% of male dealers and 78.5% of male designers/salespeople working more than 40 hours weekly, compared to 76.5% of female dealers and 59% of female designers/salespeople.

However, the survey did not show a correlation between increased number of hours worked and increased income; rather, many of those with the highest number of hours worked were in the lowest salary cate-gory. And, in fact, designers/ salespeople on the West Coast who worked the fewest number of hours, compared to other geographic regions drew the largest salaries.

Kitchen and bath dealers also rated factors impacting how they compensate employees, with customer service skills topping the list of qualities they would pay top dollar for. Design skills were the second biggest factor impacting pay, followed by experience in the industry, sales skills/ability to bring in jobs, attitude/personality and longevity with the firm.

The CKD Debate
Surprisingly, one of the factors that did not seem to have a major impact on kitchen and bath designers' pay scale was the Certified Kitchen Designer or Certified Bath Designer certifications. In fact, a whopping 85.7% of kitchen and bath dealers said they would not pay extra for a designer with a CKD or CBD designation (see graph 5).

As one dealer noted, "I never have and never will [pay more for this]. It cannot be linked to design ability or sales talent."

Other dealers agreed: "Knowledge doesn't always translate into ability. I'd much rather pay for proven talent, and proven results," stated one dealer on the West Coast.

The feeling that professional certifications are undervalued when it comes to compensation was expressed by a number of kitchen and bath designers, and many expressed anger that their hard work in getting certified hadn't paid off in any measurable financial way.

Several also stated their opinion that the National Kitchen & Bath Association needs to take a greater role in addressing this issue. As one wanted to know, "Where is NKBA in all of this, and why is it not involved in ensuring designers' fees? After all the dollars of testing [the association insists on to get these certifications], what is the benefit? Hey, local NKBA chapters, what are you doing? How about investigating The 'Great' Indoors?"

Another Midwest-based dealer agreed: "Architects and interior designers receive extra money for their professional credentials. Why don't we? It's time for our association to go to battle for us."

However, other dealers noted that, while they don't pay a premium for certification, they do value these, and try to show this by paying for training, dues, etc. "We encourage our designers to go for [CKD and CBD testing]," noted a West Coast-based dealer. "We can't pay extra for it, but we do give them the time they need to pursue this, and we pay whatever fees are necessary."

However, most agree that when it comes to paying salaries, it's primarily about the bottom line. As a dealer in the Northeast explained, "I have to pay my bills, too. So designers/salespeople who bring in projects and sell kitchens and baths are the ones who will [get paid] the most."

Today's kitchen and bath dealer offers a wide array of benefits, from the traditional to the totally offbeat. Along with medical and dental insurance, 401(k) plans, profit sharing, bonuses and gas and phone expenses, today's dealers are offering packages that include everything from company-paid lunches, home computers, cellular phones, flex time, reimbursement for continuing education, and special privileges like being allowed to bring children or even pets to work.

However, while dealers seem to be good at providing "extras" in the benefits package, many are still failing to provide what most would consider the most basic medical insurance. In fact, one of the most surprising results of the survey was the number of kitchen and bath dealers who say they don't offer medical insurance some 40%, according to dealers surveyed (see graph 6).

While lack of medical insurance is a problem for a significant number of kitchen and bath designers/salespeople employed by low-volume dealerships, the news if far better for those employed by higher volume dealerships: Nearly 80% of dealers bringing in more than $1 million annually offer medical insurance.

The second most commonly offered benefit was an end-of-year bonus, which 36.8% of dealers reported offering, and more than half of all designers/salespeople reported receiving in 2001.

When dealers were asked what benefit they would most like to offer that they didn't currently offer, retirement plans topped the list, followed by major medical insurance, 401(k) plans and employee training programs.

Of those designers/salespeople who do not currently receive medical insurance as part of their package, more than 90% listed this as the benefit they most desired. Second on the list of desired benefits was a company car. A 401(k) plan, profit sharing and a retirement plan were also rated high on the wish lists of many designers/salespeople.

Paid vacation time and the opportunity to take it were also cited by numerous designers/ salespeople as a benefit they would like to receive. While the majority of designers/salespeople said they received one to two weeks of paid vacation, many said they were unable to take it due to heavy workloads. "In theory, we get vacation, but it's frowned upon when you take it, and then you have to work 80 hours the next week to make up for being gone," one designer complained.

"Commissioned salespeople without any inside support are virtually unable to take vacation or be sick," a salesperson lamented. "It would be nice to have days off paid on the average of what we were paid the year before."

But not all desired perks fall into the standard benefits package. Several designers/salespeople cited less common desires: more professional training, use of rental equipment at no charge, purchase of goods at 10% above cost, an assistant to help out, better computer equipment and a company policy of matching charitable donations.

And, several designers/salespeople most wanted privacy. As one designer said, "What I'd really like is an area away from the customers where I can work on my designs and paperwork."

Methods of Payment
When it comes to how sales/ design consultants are paid, salary plus commission seems to be the most popular option, with dealers and design/sales consultants both seeming to favor this option. Some 43% of dealers surveyed said their compensation plan for design/sales consultants involves a combination of salary and commission, while 33.7% pay straight salary and 23.3% pay straight commission (see graph 7).

Of those who pay on commission, 53.4% of dealers said they pay on a sliding scale, while 46.6% pay on a fixed scale. The survey also showed that commissions were based on net earnings on jobs by 37.3% of dealers surveyed, while 33.9% pay commissions based on gross profit dollars and 28.8% pay commissions based on sales volume (see graph 8).

A number of design/sales consultants paid by salary alone expressed dissatisfaction with the arrangement, believing that, "We do all the work, yet don't share in the rewards." Others expressed the feeling that salary-only arrangements made them feel "more like paid help, less like partners in the firm's success."

Likewise, many of those paid on a commission-only basis noted that they would prefer to be paid salary plus commission, or at least be paid salary for certain duties. "I'd like to be paid salary for floor time and trade show work," one sales/design consultant noted, and another expressed the desire to be paid salary for Saturday hours worked in the showroom.

A commission-only pay structure was particularly unsatisfactory to those who felt the goals weren't realistic. As one designer/salesperson stated, "I recently left a home improvement store because they switched to 100% commission paid at completion, based on gross profit. [But it was set] too high, it was simply unattainable. If it doesn't motivate you, it's no good." KBDN

Be sure to participate in the next Online Poll, which asks how kitchen and bath designers and salespeople are paid, online now.