Compensation Plans & Change Management

There is no more disruptive force within a sales organization than changes in the compensation plan(s). There are plenty of reasons for changes – changes in strategic direction, new product line, even something as simple as territory reassignment could require comp plan changes.

As we all know, there is no other group within any organization that has such an elaborate incentive plan (other than possibly senior executives), money-driven staff, and operates in a more dynamic environment. The bottom line is that most sales staff will do whatever gets them to the bank most often, whether or not that is in the company’s best interests. Therefore whenever there is a change in company focus related to sales, you need to ensure your sales comp plan is still suitable – and if not, make the appropriate changes as quickly as possible.

How to make this process as painless as possible:

First and foremost, do not develop the new plan in a vacuum behind closed doors. While it is certainly not appropriate to hash out the details in the kitchen, it is imperative to ensure the sales team itself is represented. You need to bring in at least one senior (and trusted) member of the sales team.

If there is a significant change(s) to the plan, one might think that gradual implementation will help people ease into the changes. Do not fall for this fallacy! No matter how significant the differences are, implement everything at the same time. Anytime there are changes, there is also uncertainty with those impacted – if you roll out changes one at a time, you will make that uncertainty unbearable for most people.

The two primary keys in successfully implementing and executing a new comp plan are:

  • Ensure it is fully baked before even announcing a change. Refinements and revisions are just as bad as making the changes one at a time – it increases uncertainty.
  • Grossly overcommunicate. Seriously, most companies have one or two individuals that may almost annoyingly overcommunicate – use them as a reference and magnify.

Assuming you have a small sales team, start with a general meeting (an annual sales meeting is perfect) and announce the plan in generic terms to the group. From there, ensure you meet with every sales role impacted – do not allow anyone to say “no, don’t need a 1-on-1, I’m good” – every person affected deserves the opportunity to a closed-door session.

Once the plan is rolled out, stay consistent – stick with the new plan no matter what. That is not to say changes cannot be made. Changes need to be made on a planned schedule, not as they arise. Perhaps have a quarterly review for the first year – that would also be the time to address issues that may have come up.

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