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Thresholds
How should we build a payout table for very small goals, or goals that could go negative?
If a small business had a business plan that included an operating loss of $200,000 for the year, putting together a payout table to reward for this “success” would not work if the mechanics were communicated as a percent of the goal…
When is the use of a threshold a good idea vs. paying on every sale?
For sales people tasked with growing an established business, a threshold can be the key to focusing them on growth.
Why should I pay incentives to my employees when the company has not hit its overall goal?
This is a common question, especially for smaller companies, whose resources are limited. It’s certainly understandable for a manager to want to develop an incentive plan that only pays out of the company profits (if there are any).
Keys to Success: Six Areas to Address in Your Next Sales Compensation Plan
Workspan, August 27, 2010 — It’s fall again, the economy appears to have shifted toward the positive in many sectors, and companies are thinking about redesigning their sales compensation plans for 2011. In order to ensure the redesign process and resulting plans will provide a good return, businesses should address six key areas.
How do we keep high producers motivated when their goals keep going up each quarter/year?
The problem occurs when stellar performance this year results in a very high quota next year (calculated as a percent increase over this year’s results), and so a significant risk that the new higher quota will not be attained next year.
What is the ideal quota attainment distribution?
This is a topic on which sales leaders and finance people have strong opinions. While I’ll discuss some of the nuances around the topic below, my bottom line is that most people should achieve or exceed quota.
Are sales organizations utilizing more attainment thresholds in their sales compensation plan designs as the result of the current recession?
The logic for raising thresholds in this economy would be to protect profit. The logic for lowering them is that we are not nearly as confident in our quota setting accuracy in this economy…