I've been contacted by a number of colleagues in the past few weeks, all looking for information on "best practices" in sales compensation. And when I say best practices, what I mean is "the answer to exactly what we should do to/with our sales compensation practices".
The problem with the notion of best practices in HR is that it too often leads to a blind search-copy-cut-paste effort whereby we simply lift popular program elements (out of professional journals, books, studies, etc.) and implement them, without sufficient thought as to their fit and strategic applicability. Nowhere is this a worse idea than in sales compensation where - too often - it represents an attempt by (admittedly swamped) HR and compensation professionals to avoid the difficult and messy task of developing a deep understanding of sales strategy, structure, process and circumstances in their organization.
In my experience, a genuine contribution to sales compensation design - I don't care if you're reviewing and updating the plan or starting from scratch - demands a deep sales dive. Time spent in conversation with sales management and (ideally) sales staff. Only when you can see the sales objectives, challenges and priorities through their eyes can you bring your reward expertise to the table and apply it in a meaningful way.
With that end in mind, I thought I'd share a few of my favorite questions for these conversations. Obviously the questions and even the line of inquiry must be tailored to your organization - but hopefully these examples will help get your creative juices flowing.
Starting with the Big Picture...
What are the Company’s most important sales and marketing objectives?
What must happen for these objectives to be met? What challenges will you face in getting there?
What is the competitive environment in which the company and its sales team operates?
Looking at the Sales Process...
How are new business and growth opportunities generated?
What process is followed to secure new business (new account) or an expansion of business with a current account?
How long a period does it typically take to secure a business opportunity and turn it into a sale?
Analyzing Sales Roles, Results...
What is the overall purpose of each sales position?
What role does each sales position play in fulfilling the Company’s sales objectives?
What behaviors and results indicate that this particular role is being performed successfully?
You get the idea. And don't just recite the questions and record the responses. Keep probing until you understand - really truly understand - the answers. Your sales compatriots will ultimately appreciate your dedication to learning the ins and outs of their universe. And you'll be in a position to add value to a core piece of the economic engine driving your company.