27 Aug Sales compensation – you thought you had it under control six months ago, but…..
Aren’t there enough distractions today consuming salespeople’s time and attention without adding compensation?
As the economy “reopens,” companies need to ensure their sales compensation plans are not becoming “distractions” for their sales teams rather than motivators and guideposts for activities, focus and decisions, like they normally are.
- Sales compensation designs and practices need to be in sync with the relative predictability and levels of confidence in the quotas, goals and expectations the current environment to be motivating, cost-effective and efficient for both the company and salespeople. This will be critical over the next six to eighteen months.
- Yesterday’s plan designs probably do not align with the needs and challenges of sales organizations in today’s environment and uncertainties. Don’t force them to be. Change the plans!
“Tried and true” paradigms and designs for sales compensation plans and practices may be doomed to fail in today’s environment of uncertainty, fear, and unpredictability. Can we really expect the same designs and practices to work in today’s environment where everything else in your sales model is different or in flux and your quotas and goals lack the same level of confidence they normally have?
You may be setting up your salespeople to check-out altogether, pursue bad deals or spend time researching sales data and lobbying for adjustments, exceptions and plan changes rather than “meeting” with their customers and prospects, managing relationships and generating revenue when you need it most. Aren’t there enough distractions today consuming salespeople’s time and attention without adding compensation?
Over the next six to eighteen months, it may be best to turn pay plans into simple “pay delivery” vehicles and rely more on sales managers/leaders and the management process to drive performance and meet specific goals and objectives, not the pay plan. Sales Managers need to step-up as leaders!
Some unusual, even “blasphemous,” changes to pay plan designs and practices may be required, including:
- Using guarantees to stabilize the sales effort and take financial fears off the table
- Deleveraging the plans for the next 18 months (i.e. reducing variable as a percent of total cash compensation)
- Simplifying the plans for salespeople using “one-up” goals at the team or region level rather than at individual salesperson levels
- Adding non-revenue-based goals including activities that drive relationships and support the overall sales effort longer-term (i.e. the things managers should normally be driving, independently of compensation!)
- Being agile/flexible through this period, using only independent quarterly (monthly?) metrics, not annual or half-year metrics
- Providing managers/leaders with a “menu” of plan designs to use to meet the circumstances and needs of individual salespeople
- Changing the recognition (e.g. President’s Club) plan to better align with today’s needs and expand the base of “winners” to drive more engagement
Now is the time to consider these types of changes given how most “legacy” plans will be compromised in this environment, particularly with other changes taking place across the sales model. The right solution will need to reflect the current market and business environment and each company’s unique culture, challenges and longer-term strategies and objectives, and, perhaps most importantly, the strength of their sales managers and management process.
Both critical elements of sales performance, management process and compensation, should be addressed in a coordinated way, to ensure proper alignment and the appropriate balance of control and pay plan complexity given the state of your sales effort in this environment. It may be time to take a risk and make some significant changes to how you lead and pay your salespeople.
Thinking through this will be a real challenge for management teams with everything else happening across the sales organization. Now may be the best time to bring in an outside resource to help look at various alternatives that better fit short and longer-term needs in this environment. It can be very difficult to think “outside this box” when you’re in it!