Sales Comp Plans - Minimizing Measures to Maximize Results
Overview:
For any one sales role, there are many "right answers" when it comes to sales compensation; but there are even more "wrong answers." One of the key characteristics of the right answers is that they are simple. Simple is very powerful in sales comp design. Simple plans are easier to understand and communicate for sales leaders and sales people.
They are more predictable in terms the cost of compensation over a range of possible levels of business performance. Goal setting is more likely to be accurate and understandable. Administration and reporting of performance results and compensation calculation is more affordable. There are many, many reasons to carefully avoid complexity.
Yet most sales comp plans are too complicated. Why is that? There are many reasons ranging from well-intentioned sales leaders trying to capture every aspect of performance management in the comp plan, to finance trying to ensure that all variable pay is self-funding, to product divisions wanting to ensure adequate focus on their product lines.
In the face of all these powerful constituencies, which might include the VP Sales, CFO, and product division leadership, how does a sales comp designer hold the line and keep the plans simple and motivating? Five keys to keeping the plans simple are explored.
Why should you attend: Over time, sales compensation plans tend to accumulate add-on features, carved-out measures, cross-measure linkages, and other features intended primarily to make the outcome more "fair" to the company. But at what cost? Motivation is usually the point of the sales comp plan, and complexity works against motivation. Whenever you have to choose between Simple and Fair, err on the side of Simple.
Areas Covered in the Session:
- Short case of an a dramatic plan simplification
- Know your goals - be very clear about the business objectives for your sales compensation plans
- Limit measures - learn the characteristics of good measures, and why three is all you ever need
- No small opportunities - how much compensation does it take to drive focus and make a difference
- Motivate good performers - focus the plan mechanics on making your good people better; use performance management to raise the performance of the under-performers, or manage them out of the business
- Use all your tools - there’s more to managing sales people than the right comp plan; know what the comp plan can and can’t be expected to do well, a what other options you have
Who Will Benefit:
- HR Generalists supporting sales teams
- HR Managers
- Compensation Managers
- Sales Leaders
- Business Owners