Who Creates The Best Sales Compensation Plans?

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You may assume that I am going to give you a name of consulting firm, or even this company Sales Comp Academy.  However, the best sales compensation plans will not come from an external consultant doing the work outside of your organization.  The sales compensation consultant will guide a company in best practices, suggest items to improve your sales compensation program or even build the plans for you.  However, they cannot do the core part of plan design without your input – this has to come internally from the business.  Sales compensation plans are either internally designed or in partnership with consultants.

So, within a company, who would be best to design sales compensation plans?  Some people might say sales operations should design plans as they have the company goals in mind and know the sales team; some say the sales leaders should create plans because they know the roles best – after all, comp plans are for sales teams.  Then there are the outliers who suggest plans should be created by HR or finance, who ensure fairness or keep the company afloat financially.  Well, these are all reasonable suggestions, but the answer is all of the above.

Comp plan design and the management of a sales compensation program is a team effort.  The sales compensation plans are not designed by 1 person, or 1 leader, but a team of stakeholders who make sure they create plans that drive the right behavior to meet corporate objectives.  When you begin sales compensation planning, there should be 1 leader driving the process – whether that’s someone in sales ops, a sales compensation manager or HR (as examples).  But in each stage of the development of the plans there should be consensus as a group.  Create a sales comp committee for your organization to start the process.

 

WHO SHOULD BE IN THE SALES COMP COMMITTEE?

The employees that should be in the group depends on your industry and business.  As an example, we mentioned sales operations, sales leaders, HR, finance etc.  This is the typical blend of stakeholders in a sales comp committee.  Each role has valuable input.  However, there are cases where you want to include other stakeholders, such as product.  As an example, if your products are quickly changing or in process, then you want to include someone from the product department to make sure what you tell the sales team to sell is actually up to par.  

Now sales leaders are part of the process, but what about the employees in the individual contributor sales roles?  They may know that their leader is involved in the process, but the perspective they hold is also valuable.  Ultimately these plans are for them.  There are two ways you can get feedback from the individual contributors -1) Do a survey to find out what’s working and not working – with this you can see the alignment, or misalignment, with the sales leaders.  2) Create a taskforce – pick 1 employee from each sales role, and vet the plan designs with this taskforce before implementing the plans.  You shouldn’t have to create a separate meeting for each plan and role.  The taskforce should be able to see the design, or structure, of each role’s comp plan, because they need to work together and be aligned in the sales process.  With this you can factor in feedback from the field that will build credibility, because you paid attention and are being transparent.   

 

SET A SCHEDULE

Now that you have your sales comp committee.  Set a weekly cadence, or bi-weekly, to make sure plan development is on track.  Do analysis, or sales comp plan design steps, ahead of time so that when the committee is scheduled to meet, decisions can be made.  This will prevent bottlenecks in the process.  Your schedule should run at minimum until plans are fully rolled out.  I would then shift the weekly cadence to monthly or quarterly, because after you deploy sales compensation plans there will be questions that arise and you will want the team stay abreast on how plans are performing. 

 

CONCLUSION

In the end, when you have the right people in the process and set a plan for delivery, you will generate buy-in and consensus.  So that when plans are rolled out, everyone who needed to be part of the process was part of it and will know that it is achievable.  Collaboration and communication are key in a sales compensation program.  To find out the full process in building sales team compensation plans or how to develop a communication plan to a sales team check out our comprehensive sales comp course here.  For those of you who already have plans and just have questions, we also have a sales comp community, find out more here.

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