TLFeBOOK in Software

Printer Code128 in Software TLFeBOOK

To provide the real-time reinforcement of the incentive plan, provide comprehensive and timely reports on sales performance and payouts Sales personnel should be able to see all transactions, adjustments, credits, and payout amounts with relative ease Drill-down Web sites are ideal for providing this level of always-ready detail Add informative motivational features to the reports by displaying the performance and pay information in charts that show progress year-to-date, year-over-year, and individual progress as compared to the salesperson s peer group Provide other interested parties with program reports on a regular basis

Provide a means to issue plan updates and advisory notes regarding plan interpretation Use a memo format for non-Web-based plan communication Have multiple approval signatures Designate a central repository for these updates, changes, and advisory notes

What if your company requires no change The strategy, job content, and performance measures have not changed What should you do Don t miss the opportunity to use the annual review of the plan to restate and support the ongoing strategyA new plan year still provides the same opportunity to reach out and communicate with sales personnel

Summary

Implementation and communication activate the sales compensation program Carefully plan the implementation steps Leave nothing to chance Confirm accountabilities, test and retest system solutions, and monitor progress Think of the communication program not as an administrative event, but as an advertising and/or marketing event Make use of the creative talents within your company to develop a theme to market

the new sales compensation program to the sales force Make sure all levels of sales management participate in the process Use personal communication whenever possible Your actions will tell the sales force how to act if you think it s important, they will think it s important If you don t think it s important and you suboptimize your communication opportunity your salespeople won t think it s important either

How effective is the sales compensation program It s a simple question and is often asked by senior management The company expends significant amounts of money on the sales force, especially on the compensation paid to sales personnel But is it working Is the company getting the right sales force focus Is the sales force motivated by the pay program Use the following five factors to assess the sales compensation program:

Strategic alignment: How well does the plan support the company s business objectives Employee motivation: Do the sales personnel strive to earn incentive pay by excelling on the program performance measures Best practice variance: While some companies will intentionally vary from best practices, knowing these variances may help identify unexpected consequences Return on investment: Is the company getting an effective return on investment Program management: Is the program management consistent with plan documentation Is it timely Accurate

Each year, sales management should undertake a full, formal review on all five of these factors For sales organizations facing volatile market conditions, more frequent assessments may be necessary

The sales compensation program needs to support the company s business objectives An assessment of the sales compensation program begins with a review of how well the compensation program supports the strategic objectives of the company

Begin with a confirmation of the company s objectives Gather any written statements of financial, product, and customer goals, and then proceed with senior management interviews These interviews will provide contemporary confirmation of the goals of the company Include both the vice president level and other headquarters personnel interviews including finance, product management, marketing, and sales leadership Prepare a summary statement of sales objectives for review and confirmation by senior management Next, review all the performance measures in the sales compensation program to assess how each measure contributes to achieving the company s objectives Examine the importance of each measure by reviewing the relative weighting of the measures Finally, examine the performance payout information by performance measure to see the relationship between compensation and performance Figure 10-1 displays the relationship between total pay and sales volume The relationship is moderate This would suggest further investigation to examine how incentive pay relates to quota performance

180 160 140 Total Compensation 120 ($000) 100 80 60 05 07 09 11 13 Sales Volume ($ Millions) 15 17 19 21