19 Nov 6 Ways To Change Your Sales Compensation Plan Before It’s Too Late
Sales compensation plans must change fast if an organization plans on success. Although employee engagement numbers and the challenges of remote work are obvious reasons for policy change, it is near impossible for most businesses to change fast enough to make a difference. Of course changing an incentive plan is difficult, but the main reason most sales organizations don’t change fast enough is the same reason people struggle with change – Change is hard, and when everything around you and your business is changing without notice almost every day, your first inclination is to SLOW DOWN and stay in the time worn groove of the “way we were”.
Take a moment and think back to the beginning of 2020. Your salespeople were likely excited about the economic news of the day; The stock market was roaring, unemployment was at an all-time low, there were no supply or shipping issues, the coronavirus was mostly unheard of, and while there is always a “Talent War” for top performers, the Great Resignation was nowhere to be seen.
Fast forward to post-vaccine COVID deaths, all remote sales teams, the Great Resignation, 9-month supply chain delays, “refusal” to work, Jeff Bezos and Elon Musk taking off for outer space, ludicrous increases in shipping costs, and the largest government payout in history. Since most salespeople have already changed their entire work routine to survive the shutdown, CROs may be reluctant to alter commission, incentives, base pay, or reward structure.
In times like these, one can hardly be blamed for hesitating. If you’re in a “wait and see” mode, STOP it. According to McKinsey, B2B sales may be forever changed.
“He who hesitates is lost” is not just advice, but a fact – when we hesitate, we are lost in hanging on or letting go. Indecisive leaders lose. Right now is the best time to let go and jump into the truth – your sales compensation plan is probably outdated and needs to change, now.”
6 Ways To Make Your Sales Compensation Plan Better
If you fail to change the pay structure, you won’t be adding a level of certainty to anything. While some pre-pandemic compensation plans are appropriate for the future, most need some updates:
- Reduce distractions. Even temporary guarantees can help stabilize the sales effort and take financial fear off the table. To make guarantees more palatable to the CEO or CRO, mandate the use of tools that improve close rates. We offer a free opportunity scorecard to help salespeople and managers accurately assess their pipeline and choose prospects who are most likely to buy.
- Coordinate, don’t duplicate. Update and coordinate your core sales compensation plans with relevant SPIFFs, Contests, and “President’s Club” programs. Identify critical metrics before you choose the focus of your plan. SPIFFS and other “feel-good” rewards should be treated as “extras” – complements to the core incentive plan, rather than partial or duplicate rewards for the same KPI’s. In addition, update your SPIFFS! By 2030, Millenials will make up 70% of the workforce. Is your organization still offering outdated perks like exclusive airline lounges post-COVID? In the new normal, top performers might not be traveling for meetings. Take some time to learn about the future of work and adjust your compensation plan first, then your SPIFFS. Create a well-coordinated set of incentives, rewards, and recognition, keeping each program simple and focused.
- Review Plans Quarterly. Yearly reviews are simply not enough. While we are all craving stability, plan agility is required to attract and retain top performers now. (Remember – “He who hesitates is LOST.”) Match up with the fast pace of the new normal and create a flexible sales compensation time based on current conditions.
- Reward Team Effort. A rising tide raises all ships, so encourage teamwork by rewarding collective goal achievement. Rather than inspiring one-on-one competition, create more reasons for cooperation; A win-win model is often more profitable than a “win-lose”.
- Simplify The Plan. Make it easier for salespeople and managers to create achievable KPI’s by keeping the sales compensation plan simple. This is not the time for confusing percentages or vague rules. Be clear and concise.
- Encourage managers to drive hybrid selling. Reward managers when sales teams use digital sales processes as well as “the basics” (person-to-person interactions). Today (and tomorrow’s) top performers will need to be agile, insightful, talented, and technically proficient. Hybrid sales teams are likely to achieve higher productivity and lower costs overall; Offer generous incentives to managers and team leaders which motivate sales professionals to use more of the available technology.
A quick note of caution – Be sure hybrid sales training is thorough & complete. Don’t leave salespeople confused or frustrated. Don’t institute harsh measurements – Adopt your training programs to the learning styles and habits of individual mangers and sales professionals. Approach new technologies with a concrete plan for measuring both employee understanding and the willingness to adopt new platforms. If you want this change to occur within the next ten years, start NOW.
To learn more about how to assess your sales organization, contact Harry Dunklin at Oak Island Associates.
Sales Managers and Team Leaders Must Rise Up
In the future, 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 compensation designs and practices need to be in sync with the relative unpredictability and levels of confidence in the quotas, goals, and expectations of the current environment to be motivating, cost-effective and efficient for both the company and salespeople. 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!
To learn more about how to assess your sales organization, contact Harry Dunklin at Oak Island Associates.