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If this isn’t done you’re behind with your 2018 sales compensation plan design


We just flipped the calendar to November. We are 8 weeks from the new year. There are some major holidays between now and then impacting your available time to design next year plans. You have to use that vacation time before you lose it. Your busy closing the fiscal year strong. Also, there is a significant amount of work that needs to be done on your sales compensation plan design for 2018. You can’t design it in a vacuum but it is like herding cats to get the sales compensation design team together to make decisions. Sound familiar?

Sales compensation is a powerful lever that companies use to drive their sales force to deliver the results of their business goals. Simple, right? In order for your sales compensation plans to be the most effective they need to be aligned with your business strategy. You can spend money or spend your money wisely achieving the results you need. Today in the annual sales compensation plan design process you should have your 2018 business goals defined, the sales goals in support of the business goals identified and the sales strategy that supports it clearly articulated.

Not there yet? You may be tempted to take a shortcut and use last year’s plans. Just change the date, change the quota and maybe adjust the rate. But if you just got mediocre results last year, can you expect better this year? Even if you are on track for great results this year, you still need to go through the process. There may be subtle changes to the plan needed, minor clarifications or you may need to add some new job roles to support the growth of your business which is very common as a business grows the job roles become more specific.

There is a sales compensation design process that takes several months to do it right. It starts with the strategic identification phase which can take up to two months to complete. But skipping this step or shortcutting it will deliver suboptimal results. Your CFO wants you to spend the sales compensation dollars wisely. Your CSO wants the sales team to achieve quota. Your CEO wants to grow the business. The comp administration team wants to calculate commission timely and accurately. HR wants to have less turnover and an easier time recruiting top sales talent.

Here is a list of what should be done at this point.

  1. Defined business goals

  2. Defined sales strategy that supports the business goals

  3. Documented goals of your sales compensation plan

  4. Clarified job roles to support the sales strategy

  5. Reviewed pay philosophy to retain and attract top sales talent

  6. Determined pay for performance criteria to retain top sales talent

  7. Evaluation of historical data, base, incentive, quota attainment

  8. Identified all current issues that may be linked to the current sales compensation plans

  9. Understood business risk if new plans are not announced on January 1

Remember there are no short cuts in business planning and your sales compensation plan design is part of the business planning process.

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