Best Practices for Updating the Sales Compensation Program

Last week, OpenSymmetry and The Sales Management Association (SMA) teamed up to present best practices for updating the sales compensation program. As the end of the year approaches and plan changes are in the works, be sure to go through the following steps, recapped from the webinar, to ensure a smooth and proactive transition.

Step 1: Planning for the update process

Making changes takes time. It is best to review the changes that need to be made, assess the time it will take to make the changes, test, and roll them out. Calculating the time it will take for each step of the process will help you establish a realistic timeline.

After building your timeline, proactively promote plan changes and start communication early in order to receive feedback and buy-in from stakeholders who will be impacted by plan changes. Get involved as early as possible and anticipate the data that will be needed to ensure a coordinated effort between plan design development and ongoing sales compensation management.

As part of the planning process, assess the level of change management involved in the people, process, and technology involved. While there may be change management involved in the communication of plans to the field, it is important to know how your platform can support the changes as well as what impact the changes will have on your system, and subsequently how that will impact the payees.

Finally, as part of the planning process, be sure to have a backup plan. Given the timeframe for completion of plan design and sign-off, it is critical to have a mitigation plan in case time runs out to finalize plan changes in the system.

Potential outputs from the planning process can include a timeline for plan changes, an initial requirements document, communication strategy, and mitigation plan.

Step 2: Designing the new plans

Evaluate the goals for the next year’s plans. Getting engaged in the plan design discussions early will give you an opportunity to proactively support the process from a data and systems standpoint. This insight will give you an opportunity to better understand the goals for next year’s plans based on the strategy being leveraged and the potential modeling that is needed.

Additionally, consider the data needed to make decisions for the sales compensation program. Consider patterns revealed by sales performance analytics to make informed decisions for the new sales compensation plans.

After looking at the data available, consider options to model new plans in the incentive compensation management (ICM) platform. Modeling the plans on a micro and macro level will also keep the feedback loop going throughout the year to ensure ongoing assessment of plan performance.

Finally, establish a technology-aware design process. Most ICM systems can handle most plans, but there is often an easy and hard way to build out and administer plans. Be sure to understand new plans in a way that issues with the technology can be anticipated in advance.

Potential outputs from the design process for sales compensation plan updates can include a functional requirements document (FRD), finalized timeline with estimated costs, impact assessment, resource plan, and modeling environment.

Step 3: Developing sales compensation plan changes

In the process of developing sales compensation plan changes, ensure that the technology environments will be available and stable, including test environments. This includes making sure that those involved with development efforts have access to the environment, there aren’t any major overhauls or refreshes that are planned for that environment, and that there is applicable data in the environment that can be used for testing the new configuration. Get ahead of potential impacts on business intelligence (BI) components by looking at current reporting and analytics to ensure any changes will be accommodated in your reporting environments.

You also want to make sure that your team has correct, up-to-date data when developing your plans. Know what plan a payee is on, what their quota amounts are, and what their payment rates are. Keep your plan development environments cleaned by archiving old and unused components.

Most importantly, keep your plan development consistent. Do not allow configurations developed over time create a patchwork of formulas that don’t work well together. It is important to set standard operating procedures for plan development that are followed over the history of your sales compensation process.

Potential outputs from the development process may include reestablishing standard operating procedures for plan development, status meetings, feedback loops, and the delivered configuration.

Step 4: Testing plan changes

Testing is a vital aspect of making system updates, but also the most overlooked. Based on the anticipated changes, ensure you have a test plan in place to develop a test strategy. Come up with testing scenarios, test data, and define what is needed for SIT and UAT testing.

Make sure that you have test data to support the rules you have in place for at least one person per plan/per component/per set of logic within a rule. Additionally, test attainments that fall on the border of new tiers or at the end of old tiers to ensure that calculations work as expect. This is known as boundary testing. Additionally, test special circumstances that may not always occur in a specific commission period in order to ensure that one-offs do not create issues in the new plan setup.

Finally, test reporting and analytic capabilities – both to ensure that they are connected as well as to look for anomalies in the pay information.

Potential outputs from the testing stage may include traceability matrix, test scripts, and a migration strategy from the old plan.

Step 5: Rolling out the new sales compensation plan

The final step is to roll out the new sales compensation plan. This should start with production prep. Whenever possible, use a test environment and execute the complete migration process in a middle environment (UAT or TST) prior to final execution to validate that the process will go smoothly. Check that no dependencies have been missed. Ensure that the production environment is available for migration in the timeline established.

Establish or revisit a standard operating procedure for promoting code into your production environment and some form of a regression testing process to ensure unwanted impact on current plans can be identified early. A migration protocol may be part of the development stage as well.

Finally, revisit the employee communication plan that should have been established in the planning stage so that payees know what to expect in detail before the migration happens.

Potential outputs from the roll-out stage can include migration of configuration, any final migration sign-offs, and employee communications.

Final tips

Updating the sales compensation plan is not always a simple process but takes time and a lot of anticipation. Some final tips for updating the sales compensation plan include:

  • Ensure a conservative timeline
  • Hold to the process
  • Overcommunicate
  • Optimize where you can

As a takeaway from this webinar, here is a checklist of the action items covered in the five steps above:

  1. Establish timelines and project plan for program changes
  2. Establish a backup plan (mitigation plan)
  3. Identify design process needs (data, modeling, technology, impact, etc.)
  4. Assess the impact of new plans on current environment
  5. Establish best practices for configuration
  6. Build a test plan and strategy
  7. Establish standard operating procedures for production of changes to product
  8. Identify potential impacts to the sales compensation program and payees and communicate them accordingly

Have questions about updating the sales compensation plan? Contact us at 

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