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    Changes in Corporate Ownership

    When companies merge with each other, or spin-off business units to other companies, the transition of the sales compensation program becomes one of the most critical elements in maintaining sales momentum and preventing attrition in the sales force. Nothing tells your sales people more about the culture of the new venture than how their sales compensation plans are changing. We can develop a plan to evaluate and consolidate the respective sales compensation programs, and implement new plans that support your business objectives as well as respect the corporate culture of all entities involved.

    Organizational Changes/Internal Restructuring
    Whether a company is combining corporate functions, creating new sales channels, or globalizing their sales force, a reassessment of sales compensation strategy is often called for. Allow us to examine the current strategies, benchmark against best practices, and develop a transition methodology that minimizes distractions and focuses your sales people on your priorities.

    Marketing Initiatives/Changes in Marketing Strategy
    New product launches, realignment of competitive positioning, refinement of the value proposition – all of these marketing initiatives depend on your sales people to translate them to customers and prospects. Rely on our expertise in developing impactful incentive programs that help drive your marketing message through to your customers.

    Sales Force Recruitment/Attrition
    While a number of factors are often at work, when companies cannot recruit the caliber of sales person they need, or are experiencing unacceptably high turnover in their sales force, the sales compensation program is often a root cause. Let us help determine if the sales compensation plans are a contributing factor, and suggest alternatives that can help attract and retain the quality of sales professionals you need to be successful.

    The governance and administration of the sales compensation program are typically the responsibility of a number of organizations throughout the company. An effective governance plan identifies functional responsibilities across departments, as well as definitions of authority, and levels of approval for the sales compensation program. Let us review your current governance plan and develop one that is tailored to your company and is in compliance with industry best practices.

    Compensation Cost of Sale
    Changing market conditions require a hard look at all expenses, and understanding your sales compensation cost of sale can be key to improving underlying cost structures. Often overlooked are the eligibility criteria for being paid under the sales compensation program – too many peripheral or support people can drive your cost of sales up. We can quantify your current compensation cost of sale and recommend changes to bring it in line with your competitors.
  • Sales Compensation Program Assessment

    Eligibility Criteria
    What criteria are used to determine who is eligible for the sales compensation program? Are sales support or product specialist positions included? How far up the management chain does eligibility for sales compensation go? Total Target Compensation (TTC) What is the combined total salary and target commission for each position at 100% performance? Does the TTC of each position support a clear career path through the organization? How does the TTC compare to other companies in the same industry?

    Pay Mix (salary/target commission)
    What is the percentage of salary compared to target commission relative to Total Target Compensation (TTC)? Does the mix reflect realistic sales cycles? What are the unintended consequences of an out-of-alignment pay mix?

    What is being used as the basis for determining performance? How many different components are there? Is there goal-congruence between Sales people and their managers?

    What is the relative weighting for the different component of the sales compensation program? Does each component have enough weight to be meaningful in terms of real after-tax dollars? Is one component weighted so much that it renders other components meaningless?

    Crediting Rules
    How are sales and revenue credited to sales people? If more than one sales person is involved in a sale, how is credit assigned (split? double-paid?) How does credit flow to management and/or sales specialists?

    Pay Curves
    What is the relationship between performance and payment? Is acceleration and/or deceleration built into the payout tables? How does do payments for over-performance compare to payments for under-performance?

    Minimum Thresholds
    Is there a performance level below which no compensation is paid? What is the best way to determine reasonable minimums? What are the unintended consequences of setting the minimum too low or too high? Is there a performance level above which no compensation is paid? Should the maximums be the same for sales people and their managers? Are the legal consequences of withholding payments for performance over the maximum?

    What is the role of the Sales Department in the development process? How are decisions made about making changes to the program? Who controls decisions impacting performance (quota relief, territory re-alignment, etc.)?


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Recent Blog Posts....

  1. Who Owns the Sales Compensation Program? Richard Lenahan 29-Jun-2012
  2. Why Is It So Difficult To Get Sales Compensation Right? Richard Lenahan 06-Apr-2012
  3. The Art and Science of Sales Compensation Richard Lenahan 08-Feb-2012