Behind Many Poor Sales Compensation Plans Lurks Poor Job Design

Dig beneath a sales incentive plan that is too complicated and - as often as not - you'll discover a sales job with way too many angles and focal points.

Sales jobs that require constant shifting from prospecting to account management to order administration/tracking to installation/set-up and then back to prospecting may not be the best use of your available sales talent.  Particularly if you've staffed the jobs with hunters.  And, for a profession where variable pay can be a significant piece of the overall compensation package, jobs like this can present real challenges for sales incentive design.

I realize that, particularly in smaller businesses, people have to wear more than one hat.  But even in these circumstances, a thoughtful approach to sales job design can make a real difference in motivation and productivity.

Sales jobs, and sales incentive plans, are most effective when their focus is as clear and singular as possible.

Image: Creative Commons Photo "How Far?" by Alisdair McDiarmid

Comments

[John Mason]

Job design or job roles are critical and I will tell you why. You can only have one compensation plan per job role so in order to make the plan as effective as possible, your job role (and by default, the comp plan) must be defined properly and map to the overall strategy of the company. Want more new business versus selling to existing business? Create a plan that goes after new business for a New Business Rep(role specific and plan specific). Specificity and focus will yield the results you expect!

[Liz Cobb]

I agree with this blog and would just add that I've been amazed at how companies don't seem to compare the job roles they have. It bothered me so much, that a key aspect of our product to help people with sales compensation planning and payment is to support a side-by-side comparison of the key elements of a plan. We let you see the job roles and then compare total comp, earnings curves, measures and quotas. Sometimes this visibility further helps bring clarity to the need for better job design.

You can see a picture of the side-by-side view at www.makanasolutions.com

[Wally Bock]

Helpful post, Ann. Complicated incentive plans work against human nature. The best ones I've seen have a single "payout" component. Yes, there are other things that are part of the work, but they can be affected two ways. First, there is a "formula." One company I know used "8-6-4-1" for 8 phone calls, 6 appointments, 4 demonstrations and 1 sale.

Sales management should also be affecting how the work gets done. The best sales managers see a huge part of their work as training, followed by supervision to make sure things are getting done.