I’m hoping to start a little dialogue here. It’s no surprise that we are all in sales for one reason. The money. We endure what we endure to get the commission statement at the end of the month/quarter/year.
What is the purpose of the compensation plan?
I’ve heard over the course of my career that “comp plans dictate behavior.” I believe that to be true.
I also know that we sales folks will undoubtedly learn how to structure our deals to maximize the rules of the compensation plan provided. Taking a step back, what’s the purpose of the commission plan, or compensation plan? Here is a partial list of my thoughts:
- Define the payout. This is a no-brainer. You have to tell people how they’re going to get paid and what they are going to get paid on and clearly set all the expectations from the get-go.
- This includes defining metrics and measurable criteria of what “success” looks like. We sales types want to know when we are leading the pack, when we are identified as over-achievers and “rain makers.” It is these metrics and criteria that often really define the entire goal of the company as well as the companies perspective on the sales team.
- Interesting move recently made within our organization is that customer satisfaction is virtually owned by the entire company. Virtually every employee has some metric and compensation tied to our customer satisfaction. This is great news for our customers and great news for our company as we will all be working toward one single goal – because all our paychecks are tied to it.
This is clearly an incomplete list and I’ll probably add to it the more I think about it. My next post will expound on point #2 in more detail.
What purposes can you add to the list? Leave a comment, let’s discuss it.