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8 Keys To Designing A Sales Comp Plan That Delivers
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4). Design a plan that incorporates your company's philosophy on thresholds, how you want to pay in relation to the market, frequency & administration of payouts, and whether the incentive plan will be capped.
5). Working with your CFO, cost out the proposed plan. It should be self-funding if it's been designed properly. The more your company makes in revenue, the more the sales person will make in commissions.
6). Write plan documents that include a summary plan overview including your company's compensation philosophy, goals, definitions, exceptions, payments, plan eligibility, management's right to amend, etc. Then write individualized plan documents demonstrating the plan structure, each employee's assigned goals, and base pay plus incentive payout potential. Have the plan documents reviewed and approved by an attorney as they become legal contracts for payment.
7). Pilot the proposed plan before rolling it out to sales staff. Select a couple of your top performing sales people and give them a draft of the plan for their review & comment.
8). Rollout the plan to staff. Review it every quarter (from both financial and behavioral perspectives) and tweak it as needed to modify behavior or adjust financial goals.
Designing and implementing sales commission plans is both a strategic and tactical exercise that when done properly can generate significant additional revenue for your company. By creating an incentive plan that aligns your sales organization to collectively work toward achieving shared and/or individual goals that support company's financial objectives, you've directly influenced your company's balance sheet in a very positive way.
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Becky Regan, M.A., CCP began her own consulting practice in 1995, Regan HR, Inc. to provide human resources consulting services to businesses in California. She has been successful in growing her business through reputation and client referrals. Her work as a consultant includes the full spectrum of HR technical expertise, including C-level recruitment, compensation studies (design, market and executive pay studies, sales compensation plans), training & teaching, interim assignments as a HR Director for organizations, and employee relations, including workplace investigations and written responses to formal complaints. For more HR tips and to receive my FREE "The Top 5 Secrets to Building a Better Organization that Every HR Pro Must Know" go to www.ReganHR.com.
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4). Design a plan that incorporates your company's philosophy on thresholds, how you want to pay in relation to the market, frequency & administration of payouts, and whether the incentive plan will be capped.
5). Working with your CFO, cost out the proposed plan. It should be self-funding if it's been designed properly. The more your company makes in revenue, the more the sales person will make in commissions.
6). Write plan documents that include a summary plan overview including your company's compensation philosophy, goals, definitions, exceptions, payments, plan eligibility, management's right to amend, etc. Then write individualized plan documents demonstrating the plan structure, each employee's assigned goals, and base pay plus incentive payout potential. Have the plan documents reviewed and approved by an attorney as they become legal contracts for payment.
7). Pilot the proposed plan before rolling it out to sales staff. Select a couple of your top performing sales people and give them a draft of the plan for their review & comment.
8). Rollout the plan to staff. Review it every quarter (from both financial and behavioral perspectives) and tweak it as needed to modify behavior or adjust financial goals.
Designing and implementing sales commission plans is both a strategic and tactical exercise that when done properly can generate significant additional revenue for your company. By creating an incentive plan that aligns your sales organization to collectively work toward achieving shared and/or individual goals that support company's financial objectives, you've directly influenced your company's balance sheet in a very positive way.
Return to Page 1
Becky Regan, M.A., CCP began her own consulting practice in 1995, Regan HR, Inc. to provide human resources consulting services to businesses in California. She has been successful in growing her business through reputation and client referrals. Her work as a consultant includes the full spectrum of HR technical expertise, including C-level recruitment, compensation studies (design, market and executive pay studies, sales compensation plans), training & teaching, interim assignments as a HR Director for organizations, and employee relations, including workplace investigations and written responses to formal complaints. For more HR tips and to receive my FREE "The Top 5 Secrets to Building a Better Organization that Every HR Pro Must Know" go to www.ReganHR.com.
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