The Number One Key to Designing a Sales Comp Plan Everyone Can Agree On

Let’s say that you are armed with surefire tips for designing a winning sales compensation plan. You’ve actually gone through all the necessary steps for creating a balanced sales comp plan. You even went further to consult a professional and now you are set for the project. How do you make sure the compensation plan you create is embraced by everyone?

Every business decision that touches on different employees, decision-makers or departments can be challenging to implement. This is because each stakeholder has different opinions and getting them to agree and move in unison can be an uphill task. Unfortunately, if they don’t agree, the business risks confusion, project delays, resistance to changes, low employee motivation and poor performance.

With that said, the number one key to designing a sales compensation plan that everyone can agree on is making sure all stakeholders agree at the onset. In this case, you need to come up with a working framework that will get all the stakeholders on the same page. This way, you counter possible negative reactions to a new compensation plan from the initial design stages. You can get different groups to agree by engaging them on various matters concerning this project.

Engaging Stakeholders in Designing Sales Compensation Plan

Facilitate a session where different department heads such as the IT, sales, finance and accounts, and team representatives can air their opinions, ideas and any challenges concerning this project. You can use this forum to speak about the company goals for this compensation plan and share any data that can support your planning process. By the end of these stakeholder meetings, you should agree on various aspects of the sales compensation design:

1. Purpose – define and agree on the goals that your company needs to achieve for the year. Then, identify which goal your new sales compensation design should accomplish.

2. Principles – agree on the foundations of your compensation plan. For instance, if you want an incentive structure without any capping on commission earnings, explain this. Make the important principles known to all members at the onset.

3. The Pay – how much do you intend to pay? Ideally, you will discuss various factors that will influence your offer including what your business can afford, the market rates and others. Also, discuss and agree on the variables and fixed parameters of the pay as well as the pay curve.

Did you see why you need different stakeholders on the drawing board? The finance department has something to say about a new sales compensation structure. For instance, they know what the business can afford. The sales team leaders know what the competitors are offering. The IT department understands the intrigues of deploying a modern pay structure. Your new design stands a better chance if all these groups speak a common language.

Some businesses make the mistake of jumping straight to discuss the targets, actual calculations, weighting, and measures. They only call in stakeholders during the implementation stage. Without the above framework, you might face resistance so massive to render all your efforts and investment into the sales comp design irrelevant. Yet by engaging different departments, you create an environment where the team leaders are willing to help convince the rest of workers how beneficial the new plan is to them and the company.