October 09, 2015
by Mark Donnolo, Managing Partner, SalesGlobe
Companies depend on their top salespeople to bring in the revenue, and top salespeople depend on their companies to reward them fairly. Making sure the compensation plan adequately differentiates high performance from average and low performance is critical to supporting a sales-oriented culture.
Oh, those loyal salespeople. The high performers who exceed their quota year after year, working Saturdays and flying around the country at a moment’s notice, closing the deals on teammates’ stubborn accounts, even if they’re not actually paid for it. Those loyal, selfless, team players.
Just kidding.
We all know salespeople are motivated by their compensation (and success, but mostly money). Most high-performing salespeople—those who consistently meet or exceed their quota—will not remain at a company where they do not earn significantly more than their lower-performing teammates. They all know who’s doing well and who is not pulling their weight; sales leaders know, too. And, using the incentive compensation program, they have a nice opportunity to play Robin Hood, in reverse—taking compensation away from the low performers and giving it to the high performers.
Last year, Harvard Business Review published a piece with a statistic workplace leaders are still talking about: “A high performer can deliver 400 percent more productivity than an average performer.” When high performers have managerial support, they are more likely to enjoy their work and remain satisfied with their workplace. In other words, sales compensation can help you retain your best people.
To harness this power, however, a clear sales compensation plan is needed. U.S. companies spend more on sales compensation than the entire U.S. Federal Defense Budget, but many organizations focus too quickly on the numbers rather than connecting the plan to what the company wants to accomplish. Or they ratchet up the quotas by 10 percent, add two new performance measures to an already complex plan, send an e-mail, and consider it done. Professionals don’t know how they are being paid—they just hope their check is right. This simply is not an effective allocation of pay or method of motivating high potentials.
This lack of clear strategy and understanding makes it impossible to motivate in a way that will advance the organization. Instead, we need to connect front-line compensation with both the individual and the overall organizational strategy, so that incentive pay ultimately will do what it should—further drive high performers and revenue.
Here is a three-step guide to building a compensation plan that will increase worker productivity:
Companies depend on their top salespeople to bring in the revenue, and top salespeople depend on their companies to reward them fairly. Making sure the compensation plan adequately differentiates high performance from average and low performance is critical to supporting a sales-oriented culture.
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