| |
Sales Compensation Redesign:
Too Soon for 2008?
David Cichelli of the Alexander Group is a leading expert on sales compensation. He is the author of “Compensating the Sales Force.” In this interview, David explains why companies need to conduct a comprehensive annual review of their sales compensation plans, and why it’s not too soon to start planning yours.
Q: Some sales executives are constantly tinkering with the sales compensation program; others feel few changes are best. What’s the right answer?
A: Good question...well, neither is really correct. Sales departments are all about alignment, alignment between customers and product divisions. Both of these variables—for most companies—are in transition. A sales department is constantly fighting to maintain this alignment and thus avoids slipping into obsolence—the opposing force to alignment. The sales compensation program helps enforce this alignment. Thus, once a year, a sales department needs to check its “rigging” to ensure the sales compensation program is retaining the sales force and motivating the right types of sales behavior.
Q: I have heard you say that “tweaks” are bad, but “minor changes” are acceptable. What’s the difference?
A: A “tweak” is best described as a “non-contextual” change made outside a comprehensive design process. It’s these “tweaks” that can cause unanticipated glitches in the compensation plan. Minor changes are acceptable as long as all elements of the sales compensation program are reviewed by a cross-functional team of sales, marketing and finance management.
Q: Who owns the design of the sales compensation plan?
A: In our annual survey of sales compensation trends, the results remain pretty consistent year after year. For 45% of the companies, sales management “owns” sales compensation redesign. 25% use a cross-functional team. And, 24% assign the re-design task to HR. The remaining 5% are divided between finance and marketing. My preference: I like the idea of a cross-functional design team. It seems to work best.
Read the full interview |
|
David J. Cichelli
The Alexander Group, Inc.
dcichelli@alexandergroupinc.com www.alexandergroupinc.com
David J. Cichelli is Senior Vice President of The Alexander Group, Inc., a nationally recognized leader in sales effectiveness consulting. As National Practice Manager in Sales Compensation, David provides thought-leadership for winning sales compensation solutions.
He is a frequent speaker at national conferences, industry groups, and corporate meetings. He is the author of WorldatWork’s Sales Compensation Design Seminar. He teaches Sales Effectiveness for Columbia University’s Sales Management Program. With over 25 years of consulting experience, David’s clients include leading companies from among most major industries including financial services, hi-tech, software, telecom, wholesale, consumer goods, healthcare, and many others. He is the author of McGraw Hill’s “Compensating the Sales Force” and is a contributing editor to Sales and Marketing Management magazine.
|
