0

Compensation Plans & Change Management

There is no more disruptive force within a sales organization than changes in the compensation plan(s). There are plenty of reasons for changes – changes in strategic direction, new product line, even something as simple as territory reassignment could require comp plan changes.

As we all know, there is no other group within any organization that has such an elaborate incentive plan (other than possibly senior executives), money-driven staff, and operates in a more dynamic environment. The bottom line is that most sales staff will do whatever gets them to the bank most often, whether or not that is in the company’s best interests. Therefore whenever there is a change in company focus related to sales, you need to ensure your sales comp plan is still suitable – and if not, make the appropriate changes as quickly as possible.

How to make this process as painless as possible:

First and foremost, do not develop the new plan in a vacuum behind closed doors. While it is certainly not appropriate to hash out the details in the kitchen, it is imperative to ensure the sales team itself is represented. You need to bring in at least one senior (and trusted) member of the sales team.

If there is a significant change(s) to the plan, one might think that gradual implementation will help people ease into the changes. Do not fall for this fallacy! No matter how significant the differences are, implement everything at the same time. Anytime there are changes, there is also uncertainty with those impacted – if you roll out changes one at a time, you will make that uncertainty unbearable for most people.

The two primary keys in successfully implementing and executing a new comp plan are:
- Ensure it is fully baked before even announcing a change. Refinements and
revisions are just as bad as making the changes one at a time – it increases
uncertainty.
-Grossly over-communicate. Seriously, most companies have one or two individuals
that may almost annoyingly over-communicate – use them as a reference and
magnify.

Assuming you have a small sales team, start with a general meeting (an annual sales meeting is perfect) and announce the plan in generic terms to the group. From there, ensure you meet with every sales role impacted – do not allow anyone to say “no, don’t need a 1-on-1, I’m good” – every person affected deserves the opportunity to a closed-door session.

Once the plan is rolled out, stay consistent – stick with the new plan no matter what. That is not to say changes cannot be made. Changes need to be made on a planned schedule, not as they arise. Perhaps have a quarterly review for the first year – that would also be the time to address issues that may have come up.

  • Sign in
    Comment
    • 0
      Profile picture of Rick Struzynski
      @choosegrowth
      ( 910 POINTS )
      1 year, 6 months ago

      This strategy has proven successful for many of our clients, however I’d love to hear of any other successful strategies, or suggestions/improvement to the strategy outlined above. There is always room to improve!

    • 0
      Profile picture of Geoff Land
      @geoff-land
      ( 950 POINTS )
      1 year, 6 months ago

      Rick, good stuff and I agree with your points. One challenge I have seen in a previous role is when you add certain accelerators tied to a new service / product and getting reps to focus on developing those deals. You are 100% correct that sales folks focus on the deals that are going to make it the easiest to hit their number and sometimes that’s not in the best interest of the company. If your company wants to expand into a new market or focus on a new product or service it is hard to get the reps to focus on the new stuff. As a rep I know my future with the company is tied to me hitting my quota.

      That being said I am curious to get your take on how best to put a plan together to help the business best focus on the new market development but also incent the sales reps to get out of their comfort zones and sell the new solutions / go after the new market deal. Do you put in accelerators or larger payouts on the new market deals? Tie their over comp goal to include the new market deals so they can only hit their number with some new market deals?

      • 0
        Profile picture of Rick Struzynski
        @choosegrowth
        ( 910 POINTS )
        1 year, 6 months ago

        Great question! Depending on the specifics of the situation, the solution may vary, but in principle you want to hang the biggest carrot you can afford in front of the sales team.

        I would create a commission/bonus structure just for the new offering. Depending on how strategic and important the new offering or market is to the company’s future, I’d be OK with a breakeven P&L in order to maximize the payout to sales – at least until you get some real traction.

        I would be very careful with accelerators or negatively impacting total comp – the carrot is much more powerful in these situations than the stick.

        • 0
          Profile picture of Geoff Land
          @geoff-land
          ( 950 POINTS )
          1 year, 6 months ago

          Thanks Rick. That the biggest challenge of comping folks in a way to get them out of their comfort zone. 100% agree that the carrot is more effective than the stick in these scenarios!

New Report

Close