barcode excel 2010 The Sales Compensation Design Process in Software

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The Sales Compensation Design Process
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An important element of the sales compensation design process is the involvement and participation of key stakeholdersAs the design steps presented below suggest, various points within the design process require collaborative decision-making These involvement steps are needed to help resolve competing objectives and make tough resource allocation decisions For example, when selecting performance measures, the senior management team needs concurrence on
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the use of the right measures to ensure alignment with the company s objectives Unfortunately, sales, finance, operations, and marketing may have different and competing expectations for the sales force Leaders of these departments need to meet to identify key measures for inclusion in (or exclusion from) the sales compensation program Likewise, similar collaborative decision-making is necessary when providing automation provisioning for the sales compensation program Sales operations, finance, and information technology (IT) need to review various choices affecting functionality and costs This collaborative approach is a vote against the expert-recommended solutionWhether concocted by an inside resource, the vice president of sales, or an outside consultant, such expert solutions are often counterproductiveThere is no right answer to sales compensation designThe right answer is a shared judgment by the leadership team The leadership team needs to work the issue to examine implications and impacts of various alternatives as they attempt to drive company objectives
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Ten Steps to Sales Compensation Design
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Regardless of the size of the organization and the elapse time devoted to the redesign effort, the following 10 steps provide a road map for all sales organizations Each step provides a crucial element to ensure successful redesignThis process should be repeated every year
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Step 1: Fact Finding
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The first step is to gather information about the current program and confirm the company s business objectives Undertake the following actions to prepare a Fact Finding Report:
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Interview senior management: Gather perspectives regarding the current program and information about future sales objectives from senior management Interview headquarters staff: Learn what is working with the current pay program and where improvements are needed Gather all written documentation regarding the current and proposed jobs
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Sales Compensation Design
and organization structure Collect all information about the current pay programs including policies and practices related to account assignment, quota allocation, and sales crediting
Interview field sales management: Collect field perspectives regarding the effectiveness of the current program Capture any suggestions for changes Interview sales personnel: Learn how sales personnel view the current sales compensation programAssess their understanding of the current plan Gain their views on how to improve the program Document job contentAsk sales personnel to confirm how the current sales compensation program supports the charter of their sales job For large sales forces, gather electronic survey responses on the effectiveness of the sales compensation program Purchase external survey data: Obtain competitive market data from compensation survey sources (See Appendix B for a partial listing) Assemble pay and performance data: Gather quantitative information on the current program pay and performance data Obtain strategic goals: Solicit internal documentation on the forthcoming strategic goals of the company Document mid-year changes: Gather all mid-year changes including program design, account assignment changes, quota changes, and sales personnel movement
Step 2: Assessment
Conduct analytical and comparative assessment analysis Conduct the following analysis for inclusion in the Assessment Report
Make competitive market comparison: Compare actual pay levels with labor market practices Examine pay and performance relationship: Prepare dispersion charts showing the relationship between performance and incentive payouts Test quota system: Examine the quota system for proper balance of performance below and above quota Ensure the program is free of unintended bias
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Review performance measures: Determine if performance measures support the company s business objectives Calculate return on investment: Prepare trend charts showing the change in cost of sales and return on investment Audit support programs: Review support programs to ensure compliance with policies for account assignment, quota allocation, and sales crediting
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