One rule of thumb for plan communication is to double the amount of time you used for designing the plan to the plan implementation effort. Ideally the communication begins by letting the sales force know that the plan is being reviewed to align it with the company’s changing go-to-market strategy. Examples include:
- More emphasis on new products with current accounts, or
- A push to increase the number of new accounts, or
- Increasing emphasis on selling higher margin products.
Often this communication begins a sales force survey, selected sales rep interviews, or a meeting of Sales Council members about the current plan design. In addition, it also occurs when sales management begins discussing changes in the go-to-market strategy after the business planning process is completed, typically late in the third quarter.
The formal plan communication process generally follows these ten steps:
- Develop a PowerPoint presentation of the new plan comparing it to the current plan (what’s new, what’s not changing, and what is being eliminated plus the change in the plan component weightings) for the rollout to all sales reps in the annual sales meeting;
- Develop the plan document detailing the plan components, gives calculation examples, and provides the terms and conditions;
- Develop an Excel earnings estimator to help sales reps model the impact of the new plan on their incentive earnings;
- Develop specifications to revise the sales compensation software or Excel spreadsheets used to calculate payouts;
- Review and approve the presentation and plan document (Sales, HR, IT, and Legal) and make the any needed revisions;
- Develop the presentation script for sales management to use in delivering the PowerPoint presentation;
- Coach the first line sales managers to discuss the plan changes via a management team meeting, conference call, or WebEx;
- Ensure that sales managers conduct sales rep one-on-ones where plans are distributed and signed copies are made, and frequently asked questions (FAQs) are gathered from the sales reps;
- Develop and distribute sales management’s written responses to the FAQs to all sales reps by their managers; and
- Develop a follow up email questionnaire or on-line survey to be administered to the sales reps after the first three to six months of play payouts (dependent whether the payouts are monthly or quarterly) to assess if minor policy and payout revisions are needed.
While changing the sales compensation plan is a prime example of an organizational change management effort, the process is infrequently viewed as this type of effort. Effective communication of the new plan is the foundation to grow a company’s revenue and profit; an ineffective effort generally gets the sales force off to a slow start due to confusion, resistance to the behavioral change needed, or a perceived negative impact on earnings. Anticipating these issues with thorough communication and the involvement of both the key stakeholders and the sales reps is the hallmark to a successful plan implementation.
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.