| |
Questions and Answers:
Sales Compensation with David Cichelli
David Cichelli, senior vice president of the Alexander Group and leading expert on sales compensation, answers questions submitted from readers of his book, “Compensating the Sales Force,” McGraw-Hill.
Q: You begin your book, “Compensating the Sales Force,” with an affirmation that “sales compensation works.” What are your thoughts on the pros and cons—the rewards and benefits versus the risks? If it is true that pay for performance works, why aren’t all companies adopting such a system?
A: Companies use a wide variety of incentive compensation programs for a diverse array of jobs. Incentive compensation continues to be a mainstay of contemporary management practices. Sales compensation holds an almost legendary status as an expected part of the employment equation. However, sales compensation is a management choice. It’s neither a birthright nor a requirement. In fact, in my view, sales compensation programs are cross elastic with supervisory practices. Frankly, a well-supervised work force does not need an incentive program to be effective, and that observation is true of sales compensation. But itsuse is widespread and prevalent. Almost 85% of all companies with sales personnel provide a reward program tied to sales results. A famous—if somewhat inelegant—argument was made against incentives by the author Alfie Kohn in his book “Punishment By Rewards.” But, generally, most sales management teams believe that incentives help bring focus to the efforts of a dispersed workforce...the sellers of the company.
Q: What are in your opinion the biggest problems and challenges in sales compensation management? Is there a key to success?
A: Sales compensation is a very noisy device.It is hard to establish, keep current and administer effectively. We find that sales compensation programs tend to fail due to:1)Obsolescence. Sales compensation plans must be continually updated to help maintain strategic alignment with the company'sgoals. Most sales compensation specialists consider an unchanging sales compensation plan as a failure of sales management. 2) Complexity. Sales compensation plans are an easy “mark” when sales management is looking to get the attention of the sales force. However, too many measures—more than 3—doom a sales compensation program as it becomes overly complex.
Read the full article
Comp Doctor Archive |
|
Comp Doctor Archive
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.®, the nationally recognized leader in sales effectiveness consulting. As the National Practice Manager in Sales Compensation, David provides thought-leadership and best-practice solutions for application of winning sales compensation solutions. He is a frequent speaker at national conferences, industry groups, and corporate meetings. He is the author of WorldatWork's (association of compensation professionals) sales compensation design seminar. He is author of McGraw Hill’s book Compensating The Sales Force. He has presented sales programs throughout the world including Asia, Europe, and South America. He is a contributing editor to “Sales & Marketing Management” magazine. He is the author of many articles on sales effectiveness and sales compensation. With over 20 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.
|
