It’s true. Some sales and compensation leaders believe they have their sales compensation figured out. Their plans are performing as intended, supporting the organizational strategy and appropriately motivating the sales force at every turn. Satisfaction is high, and absent any apparent signs of trouble, a change in sales compensation plans doesn’t make sense for 2013.
Or maybe they are just delusional.
While some of these leaders may be right, few plans are in fact so optimized that they require no change. Rare are the companies that don’t even need to think about what the future might hold for their teams or sales compensation plans.
Maybe they are just resistant to change. Maybe they would feel more comfortable with continuing to do things “the way we’ve always done things around here.” Maybe they don’t want to see the challenges and opportunities that the new year will bring.
I have run across all of these types of sales and compensation leaders.
But compensation professionals looking ahead to 2013 must set aside resistance, comfort and delusion. They should focus on tackling the key opportunities and challenges: aligning plans with diverse and evolving customer requirements and sales objectives, roles, geographies and businesses. It means doing so within an industry where the only constant…is change.
Our most recent incentive practices research study asked high-tech companies like Dell, Microsoft and IBM to reveal their biggest sales compensation issues. The prevailing themes were unanimous, and consistent with our other research.
Top Five Sales Compensation Issues: ZS 2012 High-Tech Incentive Practices Research
1. Developing a standardized compensation framework.
To what degree should we standardize? Allow flexibility? What are the legal or cultural considerations? How do we get buy-in and deliver change through a successfully executed implementation?
2. Eliminating plan design complexity.
How can we accomplish our objectives more simply? How can we prevent using our plans to replace our sales managers? What are the best approaches to driving key activities, like collaboration and teamwork?
3. Compensating recurring and subscription sales.
What is the right metric? Should it be the same as one-time sales? How do we incorporate term? What are the appropriate plan and payout periods? How can we align compensation with corporate results?
4. Setting effective sales quotas.
What quota-setting methodology and metrics should we use? How can we incorporate trends, seasonality, potential, account movements? How do we engage with the field to ensure they understand and buy -in to their quotas?
5. Ensuring organizational readiness for change.
When and how should we roll out the plan? How do we engage and get the support of our managers? What resources do they need? Once it’s rolled -out, how do we maintain momentum?
Companies must meet these challenges with balance, achieving targets and motivating, and through a plan designed for simplicity, fairness and fiscal responsibility. They must meet short-term objectives while remaining adaptable enough to meet future scenarios. And while companies want to incite change, they want their sales forces to appreciate it.
Over the next few months, I will be offering insights on compensation to try and help sales and compensation leaders at tech companies make the most out of their compensation plans. One thing I can offer now through my own experience with clients: Although adaptation and growth are not always obvious or easy, they are far better options than stagnation and delusion.