Achieving World-Class Sales Compensation Design
Sales compensation is key to delivering sales and business strategy – but how do you know your current sales compensation plans are effective? In a few words, it takes regular assessments and reviews. In a WorldatWork webinar last week, Jon Clark of OpenSymmetry and Dave Johnston of the Sales Resource Group discussed the top sales compensation issues of the day, outcomes that define a world-class sales compensation design strategy, and the major components of an effective sales compensation assessment and review.
So, what is a world-class sales compensation design strategy? According to the webinar, world-class sales compensation design is defined by the following characteristics:
- Alignment with sales and corporate strategy
- Ability to develop and maintain a performance-based culture
- Integration into sales compensation processes (including communication, reporting, and administration)
- Ability to initiate and reinforce sales behaviors
- Standard-setting excellence that create clear expectations
In order to get to “world-class”, companies should have regular assessments to measure the effectiveness of the sales compensation plan, whether on an annual, quarterly, or monthly basis. In addition to assessing sales compensation plans on a regular basis for effectiveness, strategic reviews are important in the case of business issues or changes. These may include:
- Missing sales goals
- Sales force dissatisfaction and turnover
- New corporate or sales strategy and/or mergers
- Plans and corporate objectives out of sync
- New leadership
- Changes in the competitor landscape
- Changes in the regulatory framework
However, a live poll from the webinar revealed that 13% of companies that attended the webinar had not reviewed and assessed sales compensation plans within the past three years. Whether your organization is looking to optimize the existing sales compensation plan or facing a major change, there are innumerable benefits to regularly assessing and reviewing your sales compensation plan. Sales strategy does not stand still, and sales compensation plans must drive the right behaviors in a sales force as compensation is the single largest expense for companies according to Forbes. Data availability and technology support is a critical part of this process in order to drive companies towards world-class sales compensation.
For a deep dive into incentive plan design best practices and benefits of an effective sales compensation plan assessment, watch the webinar for free on-demand now.