I once heard about a client’s annual sales meeting, where the company recognized all of its top performers. As soon as the client announced the best performer of the year, the rep promptly accepted his award, walked off the stage and quit. He knew that, although he’d come out on top during the previous fiscal year, the way that his organization set quotas meant that he was doomed for a very poor year ahead, and he couldn’t take that kind of a hit to his paycheck. Not only did the company’s poor quota-setting lead its top performer to quit, but also it called into question whether we were truly recognizing the top sellers.
Quota-setting can be one of the biggest hidden dangers within a medtech company’s sales comp plan, largely due to a lack of third-party data usage. Poor quota-setting has a significant effect on who gets recognized at the end of the year as “the best of the best.” But quota-setting is one of many moving parts within a sales comp plan, and when you’re trying to stay abreast of all of those moving parts, it can be difficult to take a step back and spot potential issues before they turn into full-blown problems.
According to ZS’s 2016 Incentive Practices Research study, which surveyed 28 companies in the medtech space, one-third to nearly one-half of companies leave secondary elements of their compensation plans alone until problems present themselves. Our research shows that many medtech companies are failing to give their sales comp plans regular, comprehensive checkups, or they’re reviewing them too infrequently or too late in the game to address the negative impact of poorly performing plans.
What can you do to ensure that all elements of your sales comp plan—including quota-setting—are functioning as they should? In our latest white paper, we weigh in on three potential problem areas within your plan, and what you can do to ensure that these hidden dangers won’t compromise the success of your overall program, including:
- Regular reviews: Reviewing your entire sales comp plan—not just your core plan—early and often will call attention to potential issues, giving you enough time to smooth things out before they cause damage in the field.
- Comprehensive health checks: Looking at your sales comp plan in a more holistic manner—and incorporating feedback from across the organization, from HR to finance to legal—will help bring any potential weak spots to the fore.
No one wants a newly recognized top performer to call it quits, so it’s pivotal to be on the lookout for hidden dangers and incorporate a few simple steps up front to ensure that you’re extracting the maximum value from your entire incentive program—and avoiding major stumbling blocks down the road.