What does OTE mean; in employment it usually means you will be paid a minimum hourly rate until you exceed a performance criteria. Example: Salary $50k OTE $36k. So if you are an entry level sales employee offered this arrangement – what questions and extra knowledge do you need when facing this situation?
First problem: Why is it so hard to get the information? Because most are enthusiastic and find an opportunity appealing – detail comes later.
Second problem: Am I being scammed or shamed or will I appear dumb to ask? Again it is hard to get the information, so you will satisfice that the details will come later.
Third problem: OTE $36k means minimum hourly rate being paid. In Australia that is what it is, and no obligation to pay you more without skills loading.
Fourth problem: The performance criteria need to be set at the time of interview, and you need to understand it. So ask – If I reach the target of 100% do I then get to $50k from that time on, or is my annual salary and components (super contributions etc.) adjusted including back pay? You then make the choice whether you are scammed, shamed or fair go given.
Fifth problem: The hurdle in the performance criteria. Ask the question – if I reach my 100% target this period, will the target be stepped up and to what extent will hurdles be put in my way? Expect to hear things like 120% next time and you keep you salary at $50k, fail and we may let you go.
Sixth problem: Are you strong enough? To survive in this type of arrangement you need to be strong in your resolve and never be happy with the level you are at in terms of potential, and your energy levels need to be high. Or you will be let go!
Why might you be confused, Consider some recent forum discussion:
The more common usage I have found relates to sales. OTE – On Target Earnings – The amount of your package including base and commission structure assuming you reach 100% of your objectives, that is the ‘at risk’ salary as part of a commission or other incentive programme.
Sometimes OTE is confused with – Ordinary Time Earnings – The amount you would be likely to earn in your total package prior to shift loading or overtime. Such as in a regular job like manufacturing, or clerical.
Yep, pretty much – $500 a week before tax. Most sales jobs have a structure where you could improve that by outperforming – 120% of objective results in double the commission payment.
OMG that’s low. I can’t seem to find a stable full time job (due to the fact that I am junior and don’t have much experience). I can’t afford to only do contract jobs which only last a few months and then I can’t find work for another 2 months or so. So I thought I would move into sales and marketing for now. Thats soo low compared to what I was getting.
If its a sales / marketing job, then OTE = on target earnings. That is the amount you can expect to earn if you are good at your job and can achieve anticipated sales objectives. If you are not good at your job and cannot meet sales targets, you wont make money and you will likely be let go. e.g. an ad that says 120k+ OTE means that based on in place sales metrics, you will be able to make 120k per year gross if you can meet sales targets. Of this, 40k or so might be retainer, with the rest commission. If you aren’t a good sales person, don’t apply for a job with OTE.
Over to you – your choice!