Once upon a time, business deals were sealed with a handshake and a person’s good word. But in today’s business climate, sales organisations run on complex, global systems where face-to-face interaction is increasingly rare. In a sea of enterprise bureaucracy and a hyper-competitive global market, sales organisations can easily lose sight of simple, yet powerful ways to drive performance and keep talented sales people happy and productive. And, let’s be honest: What’s a more powerful motivator than fast, efficient and highly rewarding sales compensation?
All too often, however, incentive compensation plans are overly complex, difficult to understand and even harder to manage. Sales people may spend hours per week (or even per day) calculating their own incentive payments, which may or may not match the actual payout they receive. What’s worse, all the hours spent “shadow accounting” are hours not spent following up on prospects. As a result, these and other inconsistencies can not only create mistrust in the incentive compensation management (ICM) process, but can impact performance across the entire sales organisation.
Therefore, your ICM system is a good place to focus your efforts to recruit and retain top sales talent. All ICM processes should adhere to these three simple rules:
Build Trust: Simplify Your Sales Compensation Plan
If you asked your sales team to explain how your sales compensation plan works, how many would know? If you’re not sure, you’re not alone. Sales organisations everywhere struggle to quickly and consistently update manual ICM processes, which are frequently error-prone and time-consuming. In many cases, incentive payouts can take weeks to calculate and often differ from the sales person’s expectations. Issues such as payment lag time, inaccuracy and complex sales compensation plans can create mistrust and lower morale across the sales force.
A sales performance management (SPM) assessment can help greatly simplify and improve ICM accuracy. The assessment provides an end-to-end evaluation of all the key departments involved in ICM, such as IT, human resources, finance and sales. By ensuring these data sources are included in the overall ICM system design, sales organisations can deliver a more efficient, simplified and comprehensive sales compensation plan that everyone can understand.
Improve Communication: Automate and Deliver Incentive Payouts Within Days, Not Weeks
Many organisations maintain several booking systems with multiple sources of data that need to be correlated and verified. Without a single source of the “truth,” it’s nearly impossible to distribute sales incentives accurately or on time. Some sales people may even receive more than one payment, which creates unrealistic expectations, confusion and mistrust in the incentive compensation process.
An SPM solution can help automate the distribution of incentive payouts that are quickly and accurately calculated using reliable data. As an added benefit, organisations can generate detailed ICM reports to maintain well-documented audit trails that help ensure compliance with government regulations.
Reward Performance: If Your Sales People Go Above and Beyond, So Should Your Sales Incentives
Look at your compensation structure: Is it designed to drive and reward outstanding sales achievement? Far too many sales organisations create disincentives by rewarding both low- and high-performing sales people. In some cases, sales staff who achieve only 40 percent of their sales goals still receive incentive payouts, which often has the unintended consequence of discouraging them from achieving their targets. What's worse, high-performing staff may lose motivation to go above and beyond their targets. They may also choose to leave the company altogether and seek "greener" pastures elsewhere.
An SPM solution can provide the flexibility needed to easily customise incentives based on targets, thresholds, past performance and other criteria. It can also help managers benchmark thresholds and payments against current market rates to ensure sales incentives are highly attractive to both prospective and current sales talent.
Ready to reinvigorate your sales force, attract new talent and drive greater accuracy and accountability across your ICM processes? An SPM solution could be just the answer you’re looking for.
Candice Arnold is EMEA Sales Director at OpenSymmetry, a global sales performance management (SPM) consulting firm delivering end-to-end performance management solutions. She can be reached at email@example.com.