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The best that can be said about the current state of the economy is that it could take an upturn by the late fall, 2009 and, thus, we could see meaningful business growth beginning in 2010. In the interim, companies in most industries are faced with the challenge of how to manage their business in these trying times. Doing so means holding on to customers and eking out growth wherever possible.
Although we are told that senior executives - including Chief Sales Officers - are looking for signs of hope in the economy, we believe that hope has a low ROI. This means that hoping for improvement is not likely to make it happen. Now is the time to begin planning for sales compensation plan change. The purpose of this Short is to provide our readers with useful ideas about sales compensation planning for the second half of 2009 and beyond.
Four actions to consider are:
1. Early plan assessment:
2. Increase OA opportunity
* Portions of this article are based on Jerry Colletti's March 17, 2009 to Columbus (OH) Compensation Association
3. Refine the performance period and incentive opportunity
4. Rethink quota assignment practices
- Confirm assumptions associated quota assignments, e.g., business forecast/projections; reasonableness of workload model
- Confirm process used to allocate quotas or performance goals — same used by all front line managers?
- Use “early assessment” process to identify performance to date vs. quota results — determine if results are consistent with expectations; if not, change could be an alternative
- If adjustments to quotas or goals are considered, review feasibility of back-end loading adjusted numbers (Q3; Q4)
Summing Up
Sales compensation planning and plans will need to be flexible in light of economic uncertainty. Restructuring or modifying plans must address new realities, namely the focus on cost reduction, productivity improvement or both.
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