3607_SM_IncentiveCompensation_Blog-1Pradeep Hemachandran co-wrote this blog post with Scott Sandford. 

What comes to mind when you hear the term “change management?” For some, it simply means sending an email about an upcoming change. For others, it’s a training session about adapting to a change. In either case, these initiatives rarely have much overall business impact. Gallup notes that 70% of change initiatives fail, and when they do, some might think the change itself is the culprit. However, often the failure isn’t in the change itself but rather in the way it was rolled out, and for most firms, a poor change management rollout costs millions in lost motivation and revenue.

Change management is particularly important for sales compensation. For all of the thinking that goes into creating plans to motivate your sales force, new plans often fail due to change management challenges during roll out. Reps are often skeptical of any change to their compensation plan, equating change with a pay cut. The impact of failed rollouts, which cause sales force engagement to wane, dwarfs any costs associated with change management.

The good news is that the above scenario can be avoided with an appropriate change management strategy. While large transformational changes to the sales compensation plan need this type of support most, smaller changes also benefit from better change management. Effective change management should be thought of as a journey from a stakeholder’s initial reaction to the change to the point where they’re on board with it and excited about it.

Here are three steps to optimizing your change management strategy:

  1. Building the case for change
    • Make the case for change: What is the business upside?
    • Define the behavioral vision: What will good look like if this change is successful?
    • Set inventory change requirements: What tactical items are needed to support the change?

  1. Engaging stakeholders
  • Stakeholder mapping: Who is impacted by the change: reps, high or low performers, first-line sales managers, headquarters operations, customers or executives?
  • Stakeholder analysis: How big a change is this for each group? How happy are they with the status quo?
  • Engagement plan: What tools will help strategically move each stakeholder from where they are to where you need them to be?

  1. Rolling out the plan and measuring impact
  • Pilot your plan, select change champions in your organization who will advocate for the plan and develop a roadmap for launch.
  • Integrate learnings from your pilot and change champions, then launch the plan.
  • Measure impact through pre-defined metrics, and adjust if needed.

The next time your organization wants to take shortcuts in the change management rollout process for a new sales compensation program, consider the cost of not rolling out the plan well. Careful planning will pay for itself many times over by the end of the year.


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Topics: sales compensation plan, sales compensation, sales incentives, change management