Practical Sales Compensation – Getting Started (Part 1a)

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So, now…

Getting Started:

The initial flurry of activity should be about building a foundation for a successful effort.  Some of the key elements to focus on include:

  • Securing Executive Sponsorship – Prior to kicking off a project, a high level executive (e.g., VP of Sales, Division/Business Unit President, etc.) should be identified as the primary sponsor for the initiative.  This individual needs to be at a high level within the company and is, ideally, respected and well-regarded as he/she will lend stature to the project, ensure access to and cooperation from the right players, as well as the necessary commitment to get the work completed.TIP – Once you identify the right individual, make sure you spell out the expectations around their role in driving success. Establish a regular schedule to provide them progress updates so they know what is going on, and reference them and include them in communications that go out to the Design Team and the broader organization.
  • Creating the “right” Design Team – There are a number of variables to consider  when selecting an effective Design Team. Decisions around how many and who to include could depend on the level of openness desired regarding the review and redesign of the incentive program.   In general, the Design Team should not be too large so as to make it unwieldy in terms of scheduling and full participation – less than ten is good, seven or less is even better.  Additionally, what I recommend is to include representatives from multiple functions that have a vested interest in the components of the program and its execution.  This typically includes Sales Leadership, Marketing, Sales Operations, HR, and IT (especially if there is a great deal of data accuracy or complexity involved). Additionally, representation from the sales force itself is important for ‘buy in’ – don’t forget you’re ultimately impacting their paychecks!  (I talk about this a bit more below.) Another area of decisions is around personalities.  If there are strong ones (and invariably there are in almost every design team!) whoever facilitates needs to make sure discussions are not dominated by one or two individuals. Otherwise, the end result can be that other team members feel excluded which can then come back and damage support for the final decisions during an eventual rollout of the plans. So, make sure you have a strong facilitator who can ensure an objective, fact-filled, and observation-driven process!
  • Inclusiveness – Although this issue was somewhat addressed in the Design Team topic above, let’s address the broader question of including sales people and others impacted monetarily by the incentive plan.  While it’s true that everybody cannot be on the Design Team, functions like sales, marketing, and sales operations should be tapped into for input, either through one-on-one interviews, focus groups, or surveys (online ones work great!).  Some organizations are uncomfortable with this as problems are raised about other areas like manufacturing quality and supply chain management, which impact a sales person’s ability to sell which, in turn, impacts their ability to surpass their objectives and obtain a high incentive payout.  Organizations often want to keep any and all activities associated with incentive plan design confidential.  My personal observations on this issue are that sales people invariably find out about anything going on concerning their incentive plans, and it can provide leadership with much more credibility in a roll-out situation, if they can highlight that they have been listening to the sales force and other functions, and incorporated commentary into the newly developed plans. This limits the bad ‘surprise’ element!

Next time, I’ll finish this section of “Getting Started” by discussing  Communication and Educating Team Members…