Sales Compensation Plan: Careful With That

Sales Compensation PlanItching to change your sales compensation plan? Every so often I get a call or an email from someone who is bursting at the seams with the thought. They believe altering their sales compensation plan is going to solve all of their problems. Careful with that. Changing the plan will cause more problems than you think.

I'm not saying "Never change your sales compensation plan." That would be silly. But I am saying, "Don't head into the process of changing your comp plan and believing nothing bad or unexpected is going to happen."

Challenges of Changing Your Sales Compensation Plan

The first thing you should know is that when you change the comp plan, whatever alterations you make, people are going to be mad at you.

Here's the truth: no matter how good the change is for your salespeople, even if it truly is better for them, someone is probably going to quit.

Irrational, I know. But this is what happens. "Who the heck do they think they are, coming in and messing with how I'm getting paid? Forget this." Be ready to lose your top performer. Maybe it won't happen to you. It can, though.

If you look at the DISC profile, you'll see most people are Ss and Is. These people don't publicly complain very often, because they want to get along. But they may resent the change. And resentment causes a ton of problems: work slowdowns, your tasks being put to the bottom of the pile, low motivation...and more bad things.

The second common issue with altering sales comp plans is the "Robin Hood Syndrome". Rob from the rich to pay the poor. The plan gets weighted to reward the top performers less and the low performers more. That way the low performers are incentivized to stick around. Again, sounds irrational, but business owners and sales managers do this.

Comp plans need to reward your top performers so that it's perfectly plain that they're top performers. No one should be in any doubt.

The #1 Step You Can Take to Minimize Problems When Changing the Sales Compensation Plan

Many owners and managers come from 'on high' to make sweeping improvements to the business. Especially owners: after all, it's their business, isn't it? The problem is the friction this causes with employees who feel steamrolled by that process. They had no involvement. They're being dictated to. The Ds in the DISC profile may quit outright. The rest will resent the steamrolling. See the problem?

So what you can do to make a huge difference in managing this change is get their involvement.

Tell them what's going on before you do anything.

"I called you all together because I'm thinking our sales comp plan isn't working. What do you folks feel about it?"

Ask them what they believe would be a good solution.

You don't have to adopt their suggestions--but getting their ideas and feedback is a big step to reducing that friction accompanying the adjustment. They'll know you listened. And that goes a long way.

Thinking about changing your sales compensation plan? Tread carefully. Well-meaning but high-handed alterations breed resentment and cause unexpected friction. People may quit. Be ready for that. For best results, involve the sales staff early and often. You do not have to accept their recommendations, but just by asking for their opinions you'll have helped ease the stress of the process. And who knows? Maybe they'll give you a better comp plan than you would have come up with on your own.

>> Jason Kanigan is a sales force developer. Did this info help you? Share, Like or Comment to let us and others know! <<