Are Your Sales Compensation Plans Dysfunctional?

BY Kathy Crosett
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Your product or service might be so technical that your sales reps need extra training in order to successfully sell. They shouldn’t encounter the same situation with respect to the compensation plan you are offering. In his recent Business2community post on dysfunctional sales plans, Dave Brock explains how you can avoid compensation schemes that ultimately demotivate your top producers.

Throughout the organization, Brock explains, employees — especially senior managers, keep track of who is getting a better deal financially. This attitude prevents managers from focusing on the real question, “what is the value of a salesperson to us (at plan).” To maximize sales activities, senior leaders need to put their egos aside and determine how much they’ll pay great salespeople, especially those who exceed quota. Managers needs to get over the fact that they may not be the most highly compensated individuals in an organization.

Brock also encourages sales managers to establish an easy-​to-​understand compensation plan. It’s a mistake to focus on bells and whistles like bonuses or performance schemes that require folks to constantly calculate what they could earn. In these systems, salespeople have a tendency to try to figure out how little they can work in order to optimize their financial reward. What you really want them to do is sell your product.

As a sales manager, you should emphasize that the financial reward is not the only benefit to a position at your company. Help your sales reps improve their basic selling skills with regular coaching sessions. Offer support when they are having a rough time with a stubborn prospect or customer. Make them feel they are valued team members by soliciting and listening to their input.

Sure, salespeople are interested in financial compensation. The way your organization treats this topic sets the tone for how salespeople feel about the base salary and commissions. Be fair. Be consistent. And remind your sales reps that they comprise a critical piece of the organization. No company gets far without a great product or service and a great team of sales reps.