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5 Tips to Follow-Up a New Sales Compensation Plan Launch

Research shows that two out of three B2B companies enter a new fiscal year with a new or significantly revised sales compensation plan. Given both the number of companies making that change and the amount of time multi-functional teams spend on plan design and implementation, we believe it is important to confirm that the new plan’s launch was successfully completed. Here are five tips to act on within the first 30 days of new plan launch:

  • Quotas or sales goals are in the hands of your sellers. Sales people tell us that nothing is more frustrating than receiving a new plan without the corresponding sales quotas (or goals) which are the basis for payout. If sales quotas were not issued at the same time as the new plan, are they in the hands of sales people no later than two weeks after the start of the new year?
  • Performance reports are available now. No measures should be included in a plan that can’t be tracked and reported to participants at the beginning a new plan year. Well in advance of the first payout under a new plan, managers should have in hand a complete set of performance reports that are available under the new plan.
  • The sales force understands the plan. The degree of plan change typically determines the need to validate its understanding by the sales force. This is particularly important if there is an expectation for a material change in selling behavior. For guidance on how to structure such a survey, including illustrative questions, see our book: Sales Compensation Essentials: A Field Guide for the HR Professional, 2nd Edition, WorldatWork, 2014, pp 154-156
  • Managers understand how to manage with the new plan. Our research shows that too often companies underestimate the importance of training sales managers in how to manage with a new sales compensation plan. The best way to insure that all sales managers are on the same page relative to managing with a new plan is to conduct a training session to accomplish four objectives: 1) Explain the best features of the new plan (i.e., what’s changing and why); 2) Equip managers with the tools and techniques to succeed in managing with the new plan; 3) Help managers formulate a plan of action; and, 4) Practice using that plan of action
  • Expected business outcomes are understood and agreed to by senior management. Typically, senior management will want to know two things about a new sales compensation plan: 1) Will the new plan result in directing behavior and performance to the desired business outcomes; and, 2) What are the cost consequence of the new plan; will it cost more, less or about the same as the former plan if the same level of performance as prior year is achieved? With that criteria in mind, it’s a good idea to reconfirm with senior management that the expected outcomes under the new plan (that may have been the basis for the plan’s approval to begin with) have been effectively communicated to the sales force and that there is clear evidence of “buy-in” to plan change.