101 Compensation Plans
During slow economic times, getting the most out of your sales reps can be a challenge, for obvious reasons. But it can also be difficult if your compensation program lacks the necessary components to keep both sales and management teams happy.
The following advice will help you find the best way to compensate your sales team and keep sales (and morale) high, even during the leanest of times.
Keep it simple. When drafting a compensation plan, the best strategy is to resist the urge to cover every possible condition.
“A plan is considered too complex if there are more than four key performance indicators or 10 or more conditions exist to determine credit allocation and payment release,” says Christopher Cabrera at WorldAtWork.org.
“Don’t confuse and demoralize reps with plans that try to do too many things.”
Easily accessible. Don’t make performance reviews and progress a mystery.
“Provide web-based visibility into plans and the compensation process so reps can quickly and easily see in ‘real time’ how they’re being compensated, where they stand relative to their plan and their peers, and how much more they can make if they engage in certain sales behaviors,” says Cabrera.
Knowledge is power. Kicking the tires and taking a test drive will help you work out the kinks before implementation.
“Model plans and plan changes prior to implementing them to determine their impact,” says Cabrera. “This will provide insight into key factors, including how different order forecasts (using actual or projected orders) will alter budget for incentives or how proposed changes to the organizational structure or quota might change the top and bottom lines.”
Striking a balance. It’s important to be fair but realistic when determining compensation amounts.
“You want to create a mentality among your sales force that they must work hard and perform at high levels each and every day in order to earn enough money to meet their immediate needs,” says the staff at OnlineBusAdv.com.
“We recommend that between 17 and 26 percent of the gross profit generated by a sales person in any given sales year be paid to them.”
WBJ Web Partners
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