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Designing a great sales compensation program that...
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Aligning the Stars: 5 Approaches to Ensure Your Sales Roles and Compensation Plans Align with the C-Level Strategy
Join Alanna Mahone, Vice President, Human Resources at Mansfield Oil Company and Jim Benard, Executive Director of Consulting Services at SalesGlobe for their Total Rewards presentation in Washington DC on May 7-10. And please stop by booth 714!
It’s the single biggest expense for most companies with the motivational power to move financial mountains, but many executives squander the opportunity sales incentives present to directly impact the growth of the business.
For senior executives, the impact of the compensation plan on the sales organization is one of the most important drivers in reaching the company’s revenue and profit goals. The compensation plan directly guides the efforts of the sales organization. It trumps leadership messages, sales strategies, sales management, and sales training. The sales organization will usually listen and move where compensation leads, good or bad.
Alanna Mahone, Vice President, Human Resources at Mansfield Oil, a national supplier of energy products, explains five clear steps to designing a sales compensation plan that drives the correct behaviors from the sales organization and helps the company achieve profitable growth. As the sales leader for all of Mansfield’s sales channels, she is responsible for connecting the sales strategy to the roles and incentives that will drive the organization to achieve their goals.
Jim Benard, Executive Director of Consulting at SalesGlobe and 20+ year veteran in Sales Operations and Compensation, understands this connection well. Jim has decades of experience as a practitioner; formerly head of global sales operations for Silicon Graphics and an executive with Amdahl, Cabletron, Stratus, and Clearcube, he now helps Fortune 1000 companies design effective sales compensation programs.
Alanna and Jim have worked together designing complex sales compensation programs that align with the C-level goals. Together they will bring knowledge, experience, and examples describing five methods to ensure the sales compensation plan aligns with the C-level strategy. They envision the session as interactive and discussion-focused, offering attendees many opportunities to share their own experiences and ask questions.
- Understand the C-level goals. Too often sales compensation plans begin with the numbers. What did we pay last year? Rather than start with the plan, sales compensation must start with the sales strategy. While C-level executives should not be involved in plan design meetings, they should be involved in the early stages of the process to help set the priorities. Mark and Tom will offer a framework for these C-level conversations, including critical questions around customer goals, financial growth goals, coverage goals, product or market goals, and talent goals.
- Include the correct sales roles. Organizations change, as do sales strategies. As those strategies are modified, sales roles either evolve or fail. When companies grow from year to year, they don’t grow in a straight line. They hold onto some revenue from current customers, they lose some revenue and customers, and they grow in other areas. Analyzing the ebb and flow of revenue and profit can help a company understand how it grows, plan for future growth, align sales roles, and motivate the right results in those roles. Mark and Tom will discuss three strategies for revenue growth (retention, penetration, and new customer selling) and which sales roles align best with each strategy for growth.
- Understand what sales compensation can and cannot do. One of the ironies of sales compensation is that while it’s a tactical program, it can churn up issues that are actually bigger misalignments of sales effectiveness. Sales executives have to be able to distinguish between issues that are related to sales compensation and those that are indicators of bigger strategic challenges or problems with the sales process. Mark and Tom help to identify these pitfalls that can detract from a clear incentive plan.
- Use the Reverse Robin Hood Principle. Too often, upon a close analysis of payment distribution, it becomes clear that your top performers are not earning significantly more than the low performers. Obviously this creates several problems, including retaining those high performers. Make sure your top earners are your top performers, and that you’re not unintentionally over-paying the under-performers. Mark and Tom also offer the Pay Mix Positioner Tool that help determine pay mix based on the desired behaviors for each role.
- Set Objectives and Quotas that tie directly to the strategic goals. Once you have effectively articulated priorities around target customers, core and strategic products, channel mix, sales talent, and financial growth it’s time to tie quotas to these objectives. While there are several well-known quota-setting methods, historic-based being the most popular, Mark and Tom recommend a market-view method, which looks at the potential in each market segment and account type.
These five points have successfully guided Alanna and Jim in the design of incentive compensation programs that connect C-level strategic goals to the front line sales organization.
See you there!
Contact Jim with any questions: firstname.lastname@example.org.