Manage Sales and Incentive Compensation
Sales incentives, as captured in an organisation's sales or incentive compensation plan, are key drivers of sales force behaviour. They also significantly impact the ability to recruit, retain and motivate sales people.
Effective sales compensation plans need to align sales execution with corporate strategy, attract and retain talent, and guide sales people's activities, in a cost-effective way.
Some of the fundamentals that need to be considered are rewarding the right behaviours, optimising sales effectiveness, and maximising the return on compensation dollars paid.
The plans need to be able to be managed efficiently and be flexible enough to underpin quick response to changing market and internal conditions.
How do organisations currently manage their compensation plans?
Recent studies in North America have indicated that over half of all companies use Excel spreadsheets 1, 2. About a quarter use internally developed systems and under 15% use commercially developed incentive management systems.
Whilst Excel-based incentive compensation plans may be the right solution for smaller sales forces with simple plan designs, it's in the larger sales teams where they may lead to inaccurate payment of compensation (normally over-payment) and inflexibility to respond to changes during the year. They also have a high admin load in calculation and particularly, dispute resolution, and lead to a significant time gap between closing business and being paid accurate compensation, reducing the motivation of sales people.
How can you overcome these problems?
There are two possible routes forward:
- Make more rigorous use of Excel
- Implement commercially developed incentive compensation system
How can Two Hemispheres help you?
Two Hemispheres has in-depth experience in diagnosing and resolving sales performance management issues. It has now partnered with OpenSymmetry with its Asia Pacific base in Sydney. OpenSymmetry has global expertise in the design, development and management of incentive compensation plans.
Together, Two Hemispheres and OpenSymmetry can help you diagnose the issues with your organisation's compensation plans, design appropriate sales roles and plans in line with corporate and sales objectives, then implement and if necessary administer those plans.
These plans can be Excel-based or managed using leading incentive management SaaS applications.
If you would like to discuss increasing the motivational power of your compensation plans and reducing the cost of operating them, contact Martin Woodcock today.
1. 2011 CSO Insights Sales Compensation and Performance Management Key Trends Analysis
2. Deloitte 2010 Strategic Sales Compensation Survey