For literally millions of reasons ($), sales compensation deserves attention from the C-level. How the plan is structured, who gets paid for selling which products or services, and understanding what the ROI is. But senior leaders – from chief executive officers to chief sales officers – usually sit so far above the day-to-day operations they ask only the most general questions, if they ask at all. They miss the opportunity to employ sales compensation as a powerful tool to steer the performance of the sales organization and help achieve their business goals.
Below the CEO, sales compensation has long been a point of conflict in the organization. While its impact can be direct, the compensation plan is a fine blend of art and science. Everyone has an opinion about sales compensation and everyone is an expert, yet few agree on the best approach to drive performance toward the company’s objectives. Sales, sales operations, human resources, and finance regularly engage in battles over questions like:
• Does the plan represent our business objectives?
• Are our highest paid sales people actually our top performers?
• Is the plan too expensive?
• Can we better motivate our organization to pursue the sales strategy?
• How can we promote more of a performance-oriented sales culture?
• Can we make the plan simpler to understand?
• Can we make the plan easier to administer?
• Are sales quotas penalizing our best performers?
• How can we set quotas that better represent the sales potential in our markets?
Too often, these battles lead to sales compensation programs that are compromises between parties, ultimately leading to underperformance in the business. Too many senior executives, concerned about the next quarter and the remainder of the year, miss opportunities to use sales compensation as a tool to drive growth.
Where do your challenges lie? Does your C-suite get involved?
What Your CEO Needs to Know About Sales Compensation is available in bookstores and on Amazon.com.