The Comp Doctor

The truth is, most compensation managers admit that they “do not own” the sales compensation plan.  They add, “the sales department is in charge of the sales compensation plan.”

Think about it.  Sales compensation is one of the most important mission-critical compensation programs a company deploys; and, the compensation manager is admitting he or she is a  “potted plant.”   Why is this?

Well, this may surprise you, but as the compensation manager, you do not want to own the sales compensation plan.  Sales compensation is a sales management device, and should be “owned” by the sales department.  It is their mission critical management tool and not your employee relations program.   But, you need to contribute to the process to ensure the adoption of an effective sales compensation program that fully supports the company’s objectives.  In fact, as the compensation manager, you can make the difference between an ineffective sales plan and a superior reward program driving revenue growth for the company.

Effective Compensation Managers
Here is a checklist of action items for compensation managers to help their sales departments:

• Get Survey Data.  Don’t even hesitate on this task.  You own this responsibility.  Spend money and buy the most comprehensive, timely and accurate survey data you can get.  And, don’t scrimp.  If you need to conduct a special survey, then spend the money.

• Educate Your Sales Management Team.   Sales compensation is not a self-taught subject.  Either bring professional training in-house or attend training programs such as WorldatWork’s certification course in sales compensation. 

• Manage the Process.  Set up a timeline for program re-design.  Start three to four months before the plan must become effective.  Lay out a time schedule of design, costing, plan documentation, automation and implementation.

• Involve Important Stakeholders.  While the sales department “owns” the sales compensation plan, this does not mean they can design the plan in a vacuum.  Marketing, finance and field management need to participate in the design process.

• Assess the Current Plan.  Offer to provide analysis of pay and performance data to evaluate the current plan.

• Help Sales Management Look Beyond The Formula.  Effective sales compensation plans depend on well designed complementary systems including job design, quota allocation, sales crediting and account assignment.  These sub-systems interact with the formula mechanics to affect the overall performance of the compensation plan.

While the compensation manager does not need to “own” the sales compensation plan, by guiding the process, the compensation manager can ensure a successful program.