Alert: downloadable templates and samples below!
Note that this post includes links to download the following: Sample communication plan in both PowerPoint and pdf formats, Template for a rollout presentation (MS PowerPoint), Template for a plan document (MS Word). Find them formatted with the gray bar to the left below.
Who is the “buyer” for your comp plans?
There are a lot of interested parties whose needs have to be met by your plans, including Finance, HR/Legal, product-focused business unit leadership, senior leadership of the business, and of course the sales leaders. But the most important “buyer” for the plans is actually the sales people who either will or won’t find the plans compelling, who will align their focus and effort to the most important sales (or not) based on what they see in the plans. “Selling” the comp plans to the eligible employees is an essential part of creating value from the plans. So… how do best-in-class organizations sell their plans to their sales people?
Start with the design process
People accept things they have helped to create better than things imposed on them. A high-involvement plan design/update process will help sales people accept the plans more easily for two important reasons:
- Understanding the sales person’s perspective will help the plan design team to craft plans that address issues the sales people have with their plans; the actual plans will make more sense to the sales people. If it’s necessary to adjust the plans in ways that the sales people will feel are unfavorable to them, it might also be possible to make other adjustments that clean up plan details that irritate or disadvantage them.
- When it comes time to craft the communication materials, it will be very helpful to directly address the perspective of the sales people in those presentations and documents. If they want a change that can’t be included it can be acknowledged and explained. If there’s a plan feature they particularly appreciate and it can be retained, it’s nice to be able to say, “We heard you, and we found a way to keep this in.”
So how do best-in-class organizations include the individual contributor sales people in the design process? It’s not by having them on the design team – that’s almost never a good idea. It’s by interviewing and/or surveying them at the start of the process, and bringing in thought leaders along the way to test/vet concepts and ideas. Finally, it’s by asking those thought leaders to preview the communication plan and materials and help make them better and more compelling. All these touchpoints provide the design team with a chance to validate their assumptions about the likely sales reaction, and hone the message and the delivery plan.
Create a communication plan
Think through the different sales person constituencies: those who will benefit from the new plans, those who are likely to earn less, those who are being asked to change their focus or results and be pulled out of their old habits and comfort zone. Consider these perspectives, and think like a sales person – what behaviors and results are most likely to result in benefits to the sales person? What reliable path to solid earnings do you want the sales people to follow? What customers/products/sales processes/deal terms will yield the best payout? What training or sales tools are available to support their success? Brainstorming all of this will result in a list of key messages that need to be conveyed.
Once the messaging is clear, consider the best way to deliver the right messages to the right groups. Often it’s best to have the most senior sales leader for a group explain the updated plans and “sell” them, ideally in a live discussion in-person. If an in-person meeting is not practical, organizations used to web meetings find that to be a good alternative. But however the new plans are introduced, it’s best that the introduction be coordinated so that the message goes out in a synchronized and consistent format. For smaller organizations this is not usually an issue, but for larger sales teams it’s a good idea to ensure the announcement happens within a few days globally.
Following the initial plan announcement and explanation, a one-on-one discussion between each sales person and their manager should be quickly scheduled, ideally within a few days of the initial announcement. This gives the sales people a chance to ask questions and clarify their understanding, and it also provides an important “teachable moment” when the sales manager can talk through the specific opportunities and strategies that sales person might use to maximize their success and earnings during the coming plan year.
Besides the steps in the communication plan, also identify the format of the communication for each step and all supporting documentation needed (presentations, plan documents, earnings estimation calculators, question-and-answer documents).
Prepare the communication materials
Your communication plan may call for a variety of presentations, documents, wallet cards, laminated sheets, videos, or even podcasts. Be current, and be creative, leveraging your internal corporate communication team or even outside resources to help make your materials as compelling as possible. Whatever you decide you need, you will most likely need the following to items as a minimum
Rollout presentation – overview
This is the first formal communication of the new plans to the sales people, and so it needs to make a good impression, excite the sales people, allay fears, and offer any important new concepts in an understandable format. This is the place to be sure you hit all those key messages identified as you developed the communication plan. Include the following sections:
Key imperatives from the market strategy for the coming year. This is a list of 3 – 5 bullet points reminding the sales team of HOW the organization intends to compete and win in the market near-term. This may include specifics about focus areas like types of customers, specific product categories, ways of selling, pricing or deal term intentions, bundling, etc.
Highlights about how the plans are changing year-over-year. Share an honest comparison of the main differences in the plans at a high level. Examples are changes in how sales contributions are measured (e.g., including a margin measure for the first time), changes in payment timing, changes in payout curves (more/less acceleration). Whatever is likely to grab the attention of the sales people as they better understand their plans should be shared up-front. Ideally there is a healthy mix of opportunities to increase earnings via improved alignment with strategic priorities alongside some new requirements that might challenge and stretch the team a bit.
The plan development process. Explain HOW the plans were updated, who was involved, how they were tested, why they have changed, what the intention is for the new plans and how that’s good for the sales people and the business.
Acknowledgement of feedback from the initial discovery process. What did the sales people say mattered to them, and where were you able to make adjustments in alignment with their insights and suggestions?
Solid explanations of any new measures or plan mechanics. Introduce these with good examples, showing how they play out both for over- and under-performers.
Overview of the plans by role. Everyone needs to know a little bit about how the plan changes are affecting everyone else. But everyone doesn’t need all the details of all the plans across the organization. A nice chart for this overview lists the main sales roles (or role categories), their key accountabilities in alignment with the market strategy, and the measures in their plans. Target incentives, quotas and detailed plan mechanics need not be shared across the sales organization.
The process for providing more detail. Finish up this overview with a calendar/plan for how the details of each specific plan will be shared. For smaller teams it may be possible to move into breakout groups immediately and go into plan details. For others this will need to be a separate event.
This presentation document should probably include a fine-print disclaimer reminding the sales people that this is an overview, and that the official plan document is the official and binding documentation of the plan, superseding any statement made in the overview.
A template for a rollout presentation may be downloaded here as a starting place.
Rollout presentation – plan by plan
Following the overview, the details of how the plans work should be shared. This most likely happens in a presentation to a group of people who are all eligible for the same plan (or plan family). Here the specifics of the plan are shared, along with payout tables and a range of examples. One of the most important pieces of this presentation is a statement of what behaviors and results will yield the best payout, a slide we often entitle, “How to earn well with our new plans.” Items on this slide should align with the market strategy and key accountabilities of the role as well as the behaviors that are expected to yield the best sales results and highest compensation.
Similar to the overview presentation, be sure to include your fine-print disclaimer in this document as well.
The plan document is the official documentation of the plan. As such it needs to be technically accurate, unambiguous, anticipate all kinds of contingencies, and be reviewed and approved by legal counsel in all applicable jurisdictions. And it needs to be friends and encouraging with a strong emphasis on helping the sales people see opportunity, not just limits on their compensation. That’s a hard balance to strike, so here are a few tips to steer you towards that magical combination:
Put the earnings opportunities in the beginning, and all the plan provisions and contingencies towards the end. Lead with the opportunity.
Start with an overview of the comp plan. What is the overall top priority for the sales role, and how important are the eligible employees to company success? What are the incentive components, how much is each one worth at target (or what is its weight),
For each plan component, provide a separate document section. Include the business need and encouragement as each component is introduced. Share the payout tables with as much simplicity and clarity as possible. Include explanations and examples in language that is clear and accurate, but doesn’t read like an accounting policy or a legal brief. Exceptions and limits on earnings may be noted briefly, but are better left to the plan provisions at the end.
Finish with the Plan Provisions section, following the encouraging and opportunity-laden description of the core plan elements. In this section, be sure to include a Management Discretion clause (claiming the right to change the plans and goals at any time for any reason) as well as all other statements about how the plan will be managed, how exceptions will be handled, etc.
A template for a plan document may be downloaded here as a starting place.
Follow the rollout plan… then keep on communicating!
The initial rollout matters a great deal to making a good first impression of the plan with the sales people. But it needs to be supported with great plan reporting and ongoing communication throughout the plan year. After the first payments are made, there are likely to be questions. Take the time to develop a communication piece and event to share answers to the questions you hear repeatedly. If three people ask, then probably at least nine more also have that question, and others are likely to have it next month. Keep the information flowing, and always stay as focused as possible on all the ways the sales people can earn well by delivering the right results.
Listen for confusion or missed messages.
Prepare compelling and positive communications to clarify and encourage.
Sell the plan, then make sure it stays sold. Its value to the business depends heavily on the quality of the communication you provide.
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.