I can still remember as a child listening to The Three Little Pigs. From the bellowing wolf to the squealing pigs, it is a story that captivates children.
As I now read it to my own kids, I hope to teach them the merits of planning, enterprise and good old-fashioned hard work, albeit through the questionable tack of terrifying them with the harrowing tale of a hungry wolf.
In the end, the pigs learned their lesson and we listeners agreed: Do things the right way and build for the long-term, even when there are easier alternatives or short-term gains.
And we still agree. Right?
For most high-tech companies, sales is a global endeavor, with global customers, partners and distributors, as well as a global sales strategy and sales force.
But what about sales compensation plans? Are they built with straw, sticks or bricks?
ZS hosted a series of roundtables to discuss compensation practices with leaders from more than 25 technology companies. We found that more than 60% of participants standardize sales roles and aspects of their plans. They understand that operating distinct regional plans can be ineffective, costly and unnecessary, and standardization can enhance collaboration, coverage and management—which leads to increased sales, not to mention cost savings.
And while this trend toward standardization is apparent through our client work and research, we still see many companies building compensation plans made out of sticks and straw.
- Organizational limitations: Organizations without clear global ownership of the compensation program may lack the governance model, infrastructure, systems and processes to manage compensation plans globally.
- Resistance to change: There may be resistance to standardization, due to manager comfort with the current plans, fear of sales force backlash or unwillingness from plan owners to relinquish control.
- Regional differences: In some instances, different geographies may have distinct selling roles, legal or compliance standards or different customs or cultural norms, making standardization difficult—or even undesirable.
The degree to which an organization should standardize its compensation plans globally is a point on a continuum, not an absolute yes or no. For some organizations, the result may be globally consistent plans for a particular role. For others, it may mean developing a global compensation framework that allows some consistency, though provides each region the flexibility to develop plans that respond to local needs and requirements.
Developing standards is an important step in aligning the compensation plans you use to guide and motivate execution of the sales strategy. While critical, this step may not be easy. Global consensus on a compensation plan framework requires significant planning, change management, collaboration and good old-fashioned hard work.
And doing so requires investing the time to build your plans out of bricks, not straw or sticks. But I think we can agree it’s the right thing to do, to build for the long-term—just ask the three little pigs.