- The devil is in the details. Many sales organizations find that implementing a compensation plan is easier said than done.
- Collectively and individually account for the audience. It can be quite challenging to create a globally scalable plan — considering that a one-size-fits-all approach may not work for all regions.
- A formal approach to change is essential. Effective change management can increase plan success by ensuring the right people are in the right place with the right knowledge.
Many sales organizations find that implementing a compensation plan is easier said than done. Leaders may think they have a well-defined plan, only to realize there are many nuances, especially when it comes to implementing it across many countries. It can be quite challenging to create a globally scalable plan — considering that a one-size-fits-all approach may not work for all regions. Spearheading this type of effort likely requires effective change management — ensuring the right people are in the right place with the right knowledge. Accounting for these factors can be the first step toward implementation success.
Pondering Global Standardization and Localization
To implement new compensation plans, sales organizations likely must strike the right balance between global standardization and localization. By first establishing global standards, companies may be in a better position to consistently communicate what they’re doing — and why they’re doing it — with all stakeholders. Only after a global standard has been defined can companies begin to define scenarios where deviation from this standard may be warranted. If compensation plans were left up to the decision of sales managers around the world, the plans and strategies would likely vary substantially.
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Still, building in some flexibility to adapt sales compensation to local practices and procedures may allow the plan to better fit a wider range of needs than one without flexibility. For example, how a sale is credited or defined may be different in the United States than in other regions.
Companies may find documenting the different processes around the world may help them understand the nuances and then map how the plan aligns with all relevant systems. Testing may help ensure data from different parts of the world can be cleanly extracted and put into one centralized source that can facilitate reporting. This can be easy to overlook for companies that don’t have the right people in the room.
Keys to an Effective Change Strategy
When implementing new sales compensation plans, strongly consider communicating and proliferating beyond those directly involved with compensation plan design. If employees don’t know what’s coming, anxiety may creep in, especially since compensation plans directly affect a seller’s paycheck. Continuously inform and educate the entire sales organization — from explaining the changes to detailing the how, what and why behind those changes.
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Another important facet of change is obtaining stakeholder buy-in. Documentation may help sales organizations achieve this because such materials can increase understanding at the individual and team levels. For global sales compensation plans, increase document readability by decreasing jargon and taking English-as-a-second-language (ESL) needs into account. For sales managers who live and breathe this every day, it’s easy to take for granted what someone outside of the core team might know is a key concept or term.
When communicating the planned changes, start with higher-level communication and then roll out the details. Be careful not to disseminate too much information at one time to the team — but also don’t spread it out over several months. The sweet spot is to establish a sequential cascade of information so managers are comfortable and equipped to answer questions from individual contributors.
Moving Forward with Training and Education
Communicating change within the sales organization may require identifying the right way to deliver effective training. When a PowerPoint may not be enough to convey the message in a unique and unified way, sales managers should look to what training type has historically been most effective within the organization (e.g., team meetings, one-on-one meetings with a manager). A helpful tactic can be to assemble and educate future trainers, allowing them to ask questions and gather more information before relaying the message.
Regardless of the chosen education method, companies should consider whether they have the appropriate materials and can answer questions from all spectrums — from “How does a plan work?” to “What happens in a scenario where we’re underperforming?” Training materials should equip managers and contributors with the tools to become self-sufficient outside of meetings.
Accurate Data’s Link to Credibility and Performance
Sales teams can have the best-laid compensation plan, but if the data to support it is obtainable, chaos and confusion can arise. Therefore, consider whether sales performance is measurable within the available tools and systems. IT team buy-in and support can ensure there is a foundational data set to be used for accurate calculations. Inaccurate data can lead to incorrect calculations that compound into credibility issues. These issues may cause sellers to second-guess the program and, in turn, detract from their core productivity because they may be more concerned about validating their commission calculations.
Once the IT department provides the foundational data, other departments can step in to play their part. For example, finance needs assurance that the measures are tracked and aligned with their reporting expectations.
Incentive Calculation … and Other Considerations
The incentive calculation part of the process is informed by the plan. When compensation plan designs are established, implementation then hinges on feeding accurate data to the compensation team responsible for payout administration. The right data increases the likelihood of appropriate calculation and administration.
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During the design phase, sales managers may at times want to include plan metrics that are challenging or difficult to obtain. Teams should be careful not to underestimate the change required for new processes. A nice starting point may be to achieve something tangible in year one and then build onto that foundation. Organizations may stumble if they attempt to change too much or too swiftly. Instead, it’s often better to lead with a simple solution rather than something complex but incomplete.
By employing strategic planning, collaboration and adaptability throughout the implementation journey, organizations may better factor challenges and opportunities and realize a smoother process when implementing sales compensation plans.
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