When embarking on changes to your sales compensation plan, make sure you won't be surprised. Michael Emerson of Indian River Consulting Group writes in Why Sales Compensation Plans Fail that the consequences of failing to consider different scenarios or not examining the impact on important individuals may be "severe and irreparable."
What's more, adjusting a plan after implementation may erode credibility and encourage ongoing lobbying from the sales force for more changes.
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Emerson also recommends enlisting individuals from different functional areas of your company, including accounting, IT and HR, to ensure that all angles of your new compensation plan are considered. For example, you must make sure it's affordable and that no employment laws are being broken.
Other steps you can take to avoid "unintended consequences" include keeping an open mind when it comes to considering the different compensation structures that are available; ensuring that agreement and clarity exist on the objectives behind the new plan; and communicating on how the program works and why a change was necessary.
"Rarely will a sales rep be more attentive than when his or her compensation is being discussed," Emerson writes. "Do not miss this opportunity to articulate to the troops the strategic direction and business objectives of the company and their role in achieving them."
