It’s planning time for many businesses – time to think through your sales compensation plan designs and decide if and how you’ll change them for the coming year. To prepare for this effort, it’s a good idea to check with your sales and business leaders about how they think the plans are doing. This checklist can be a great conversation starter to shape and focus that discussion:
- Are we achieving the results we set out to achieve?
- Is our compensation cost as a percent of revenue (or margin, or bookings…) improving?
- Is the plan motivating to the sales people? (Do the sales people understand their plans? Do they seem them as fair? What do they say the plans drive them to do? And is that what we want them doing?)
- Are we attracting and retaining the talent we need?
- How does our performance distribution curve look? (Are at least 50% of our people at or above target performance and compensation levels? Are fewer than 5% earning no incentive? Area few people (about 10%) earning a substantial payout, usually 150% to 300% of the median payout?)
- Are the most productive people earning the most money?
- Have sales roles or key accountabilities changed enough that we need to reinforce the changes with aligned changes in the compensation plans?
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.