How to Manage Sales Compensation During Mergers or Acquisitions

Mergers and acquisitions are a great strategy for boosting the growth of a business. However, they also involve some risk. For one, the process can be complex and demanding. Additionally, such changes don’t sit comfortably with most workers. This is why the business may risk losing some of its top performers. There is also the issue of sales compensation – how do you handle your new team now that two sales forces are coming together?

Why the Compensation Structure Needs Revisiting 

1. Mergers and acquisitions result in a new organization with a unique sales strategy and goals. This will call for a change in the compensation plan to meet the needs of the new business. 

2. They also bring two sales departments together, each with unique operations, leadership styles, and incentive plans. Actually, as the groups combine, the sales team structure and leadership should also change so as to avoid redundant leadership positions. 

3. Sales reps are likely to compare their incentive plans and note any differences in remuneration. 

4. The compensation plans in place may work for the respective sales teams, but after merging, inconsistency in operations, goals, and strategies are highly likely to occur.   

5. Every other part of the organization and its operations is changing. The existing processes and structures, whether for sales, purchases, or accounting departments, may not align with the newly formed company.  

Now, you don’t expect the sales teams to accept this change without an objection. To them, the previous plan is just fine. But as organization leaders or business strategists, you know better. So, go on and adjust your compensation plan where necessary. As the sales teams get used to the changes in other areas, they’ll also come to terms with the modifications on their incentives plan. But, you can help them adapt to the changes easily. Read on to find out how.  

Tips for Ensuring a Seamless and Successful Compensation Change Process 

1. Plan for the Change 

The need for change should be born out of a clear understanding of the strategic vision of the new company. With the vision in mind, conduct some due diligence to unearth the areas that need improvements, the approach, required tools, and training. Involve the sales leaders from both teams when determining the scope of the required changes.  

Together, come up with a viable timeline for the evaluation and launch of the new compensation plan. Also, decide whether you need outside resources and expertise for the implementation process. Make sure all departments, such as IT, HR, and payroll are involved in coming up with the timeline for each milestone.  

Consider having an interim compensation plan. Its design could be guided by the previous averages. But, make sure there is a way to reconcile the interim plan with the new compensation structure.   

2. Communicate the Changes 

Sales professionals won’t love it if any changes in their compensation structure catch them by surprise.  This is why you should communicate the changes continuously. Let them know what to expect and when the changes will take effect.  

It’s also crucial to have open channels of communication during this time should any of your staff have questions, suggestions, or feedback. Use this opportunity to help the sales team understand where the business is going. It’s easier for salespeople to embrace change when they get the whole picture of the new organizational needs and strategy.  

3. Have Your Top Performers Covered  

If you are going to get any objection, it will be majorly from your top and mid-level performers. And for the right reasons – they’ve been the lifeline of your business thus they deserve some consideration. This is why any communication they receive about the transition should be encouraging and positive.  

First, assure them that their compensation will be intact. Then, find a way to assist them to keep their existing customer base. In fact, among your primary concerns during the merger should be affirming the clients that their business requirements will continue to be met. This can go a long way in helping sales reps keep their client base. 

You could also involve the sales reps in the changes being carried out. As you discuss the expected changes, you’ll be amazed at how some of their ideas and opinions could be helpful in shaping your new business goals and compensation plan. Besides, your top performers will feel cared for. Use this time to communicate any plans for their training on managing change, career development, dealing with conflict, team-building, and others. 

Conclusion  

When firms are restructuring, salespeople are among the first workers to feel the heat.  Besides the pressures to meet their existing targets, they also have to make sure their pipeline and existing clients are intact. Amidst all this pressure is the need to wrap their head around the transition and any effects it may have. Don’t just let them be – help them transition seamlessly by assessing the situation, communicating efficiently, and