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Does Your Compensation Plan Need These Updates Before 2020?

by | 2 minute read

Have you been creative enough in developing a compensation plan for your sales department? Setting the right goals and linking compensation to achieving them can motivate your existing team members. When you design a compensation plan that allows your reps to stretch themselves professionally, you may also be able to attract great sales candidates.

Leading Indicators

Nick Kane, a managing partner at Janek Performance Group, encourages you to think about the long-term implications of the sales pipeline when designing compensation. Your plan likely rewards different commissions when your reps score a smaller versus a bigger client. Sales managers use that strategy when they want to be sure that large contracts don’t make up too much of the business mix.

Your reps might be obsessing about making their number this month. If they spend all their time trying to close current deals, they might let new leads languish. We all know how quickly the next quarter arrives. You don’t want to be in the position of explaining why your team didn’t meet the targets.

One way to keep your reps on track is to talk with them about pipeline management during your weekly one-on-one sessions. Another way to ensure they focus their attention on leading indicators is to work those details into the compensation plan. If your reps know they’ll get a bonus for developing leads in a new industry vertical, they may show more initiative on that topic. The same holds true for maintaining a mix of leads in the pipeline. If you compensate them for managing enough early and late stage prospects, they’ll work harder to reach that goal.

Communicating Changes to Your Plan

As your product line changes, your compensation plan should too. Last year’s mix of base pay and commission might not work in this year’s market. Your team members will be eager to learn about the opportunity to earn more money. They’ll want to see what they might possibly bring home. That’s why Kane encourages you to maintain a completely transparent and easy-to-use system.

It’s tempting to work behind closed doors on a new compensation plan and then present it to your team members. But that strategy might backfire. Employees sometimes resent having a system handed to them. This resentment can be intense if they suspect you’ve made assumptions about how hard or easy it may be to accomplish a specific task. For you, closing small accounts may be no big deal. To some of them, getting signed contracts may be a huge issue.

To get buy-in for your compensation plan tweaks, share your proposal with your team. Ask for feedback. You don’t have to promise to change everything, but be open to some of their suggestions. When they feel they’ve contributed to the design of their compensation package, they’ll be motivated to achieve their goals.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.