The 2020 Mid-Year Economic Update_long

August 25 2012

What to Do Before Changing Your Sales Compensation Plan

Volume:

42

Issue:

16

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Features

In the recent MDM-Baird Distribution Survey, we asked readers how satisfied they are that their current sales compensation plans support their business objectives. More than 60 percent responded that they are very or pretty satisfied (ranking of 6-10 on a scale of 10) that their plans aligned with their business objectives. (Full results are presented in graphics throughout this article.)

About a third responded with a rank of 5 or below, implying that they are somewhat or very unsatisfied with the performance of their current sales compensation plans.

“They are working into a headwind, because their sales compensation plan is not supportive of what they are trying to do at a company level,” said Mike Emerson, co-author of the new book from the National Association of Wholesaler-Distributors, Effective Sales Incentive Design for Distributors: What’s the Right Plan?

Editor Lindsay Konzak spoke with Emerson about the book, what distributors need to do before embarking on a redesign of their sale compensation plans, what the most common challenges are when doing so and how distributors can take steps in the early stages to ensure a smoother transition to a new compensation plan...

Uncertainty is dominating the economic discussion in the U.S. and around the globe. Chad Moutray, chief economist for the National Association of Manufacturers and a board member for the National Association for Business Economics, recently spoke with MDM about the factors behind the uncertainty and what needs to be done to address the challenges. The entire interview with Moutray can be heard or downloaded at mdm.com/executivebriefing.

While the U.S. has technically been in recovery since 2009, “most Americans wouldn’t know it,” says Chad Moutray, chief economist for the National Association of Manufacturers. Slow to near-stagnant growth coupled with anxiety and uncertainty about the future have led to an economy that appears to be “stuck in neutral.”

“If you ask manufacturers about how they’re doing, personally, their companies, many of them will tell you that their overall outlook is OK,” Moutray says. In NAM’s quarterly survey with IndustryWeek, 80 percent of manufacturer respondents said they were either “somewhat” or “very” positive about their companies’ outlook.

But tax policy and the overall regulatory environment continue to ...

 

Al Bates, president of Profit Planning Group, is arguably the preeminent expert on profitability in wholesale distribution companies. For decades his company has performed annual statistical programs, profitability studies and industry benchmarking for many associations (PAR reports) and companies.

He coined a phrase a few years back that seems especially appropriate in the erratic economy we are in today – the cost of goods not sold.

It’s a great term that describes so well the core growth issues every distributor faces now. Some months are great, others are flat. Even in the sectors where growth has been strong, most don’t ... 

Several surveys were released over the past couple of weeks that highlight issues that are challenging businesses in today’s economic environment, including health benefits costs, employee morale and the cost of travel. MDM summarizes these surveys below.

Small Business Confidence
Small businesses are seeing modest but steady improvement despite persistent uncertainty in the economy, according to Capital One’s second quarter 2012 Small Business Barometer.

On the hiring front, the survey found a two-year high in the percentage of small businesses (defined as $10 million or below) planning to add jobs over the next six months, with 37 percent planning to hire. The majority of small businesses report that their business financials have remained stable or improved, with 44 percent reporting improved financial position compared to one year ago. However, small business perceptions regarding local economic conditions remain relatively unchanged and the ...

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In the recent MDM-Baird Distribution Survey, we asked readers how satisfied they are that their current sales compensation plans support their business objectives. More than 60 percent responded that they are very or pretty satisfied (ranking of 6-10 on a scale of 10) that their plans aligned with their business objectives. (Full results are presented in graphics throughout this article.)

About a third responded with a rank of 5 or below, implying that they are somewhat or very unsatisfied with the performance of their current sales compensation plans.

“They are working into a headwind, because their sales compensation plan is not supportive of what they are trying to do at a company level,” said Mike Emerson, co-author of the new book from the National Association of Wholesaler-Distributors, Effective Sales Incentive Design for Distributors: What’s the Right Plan?

Editor Lindsay Konzak spoke with Emerson about the book, what distributors need to do before embarking on a redesign of their sale compensation plans, what the most common challenges are when doing so and how distributors can take steps in the early stages to ensure a smoother transition to a new compensation plan...

Uncertainty is dominating the economic discussion in the U.S. and around the globe. Chad Moutray, chief economist for the National Association of Manufacturers and a board member for the National Association for Business Economics, recently spoke with MDM about the factors behind the uncertainty and what needs to be done to address the challenges. The entire interview with Moutray can be heard or downloaded at mdm.com/executivebriefing.

While the U.S. has technically been in recovery since 2009, “most Americans wouldn’t know it,” says Chad Moutray, chief economist for the National Association of Manufacturers. Slow to near-stagnant growth coupled with anxiety and uncertainty about the future have led to an economy that appears to be “stuck in neutral.”

“If you ask manufacturers about how they’re doing, personally, their companies, many of them will tell you that their overall outlook is OK,” Moutray says. In NAM’s quarterly survey with IndustryWeek, 80 percent of manufacturer respondents said they were either “somewhat” or “very” positive about their companies’ outlook.

But tax policy and the overall regulatory environment continue to ...

 

Al Bates, president of Profit Planning Group, is arguably the preeminent expert on profitability in wholesale distribution companies. For decades his company has performed annual statistical programs, profitability studies and industry benchmarking for many associations (PAR reports) and companies.

He coined a phrase a few years back that seems especially appropriate in the erratic economy we are in today – the cost of goods not sold.

It’s a great term that describes so well the core growth issues every distributor faces now. Some months are great, others are flat. Even in the sectors where growth has been strong, most don’t ... 

Several surveys were released over the past couple of weeks that highlight issues that are challenging businesses in today’s economic environment, including health benefits costs, employee morale and the cost of travel. MDM summarizes these surveys below.

Small Business Confidence
Small businesses are seeing modest but steady improvement despite persistent uncertainty in the economy, according to Capital One’s second quarter 2012 Small Business Barometer.

On the hiring front, the survey found a two-year high in the percentage of small businesses (defined as $10 million or below) planning to add jobs over the next six months, with 37 percent planning to hire. The majority of small businesses report that their business financials have remained stable or improved, with 44 percent reporting improved financial position compared to one year ago. However, small business perceptions regarding local economic conditions remain relatively unchanged and the ...