Mastering Sales Compensation: Building Strong Partnerships for Success

Sales Compensation Administration is a field that blends the complexity of financial management with the art of relationship building. With over 18 years of experience, I can attest to the challenges and rewards that come with this role. Over the years, I’ve discovered that success in this field hinges on balancing employee challenges and back-office analytics by developing strong relationships, building trust, simplifying processes, and effectively resolving issues. While Sales Compensation Administration is adjacent to design, you’re there to iron out all the real world and tactical issues that arise when the plan design becomes reality. Therefore, whether you’re new to sales compensation administration or a seasoned professional, there’s always something new to learn and improve upon. This four-part series will share best practices that can make your journey in Sales Compensation Administration smoother and more efficient.

First and foremost, let’s discuss the various teams you’ll collaborate with regularly. Just as it takes a village to raise a child, it takes a village to manage Sales Incentive Compensation. As a sales compensation administrator, whether you reside in Human Resources, Sales Operations, Finance or within a different department at your organization, you’ll wear many hats. Your responsibilities will range from calculating and validating variable incentives to conducting analytics, managing payroll submissions, forecasting, designing training plans, testing, configuring systems, and resolving issues. Additionally, as an Administrator, you are the first line contact with employees who have questions and/or concerns as it relates to their compensation plans and payments. To ensure comprehensive and timely compensation aligned with organizational goals, collaboration with numerous departments is crucial.

Building Relationships: Not Just a Soft Skill
As a sales compensation administrator, being a relationship builder is essential. It’s not just about forming connections but creating partnerships with the departments you interact with daily. When I first stepped into this role, I had much to learn about effective communication and nurturing relationships. Over time, I realized that being approachable, understanding, and empathetic, especially with tight deadlines, was key to building these essential partnerships. Here are some of the critical relationships you need to develop and strategies to foster them effectively.

Sales Department: The Heartbeat of Compensation
The Sales Department is at the heart of administering compensation. Without a well-supported sales team, your efforts will fall short. To ensure sales teams are always staffed with the right talent, collaboration with recruiting and talent teams is essential. This collaboration involves:

• Creating detailed job descriptions outlining the responsibilities of sales roles, including information about the sales incentive plans.
• Crafting relevant speaking points for recruiters.
• Designing custom compensation packages tailored to various sales roles.

Regular strategy sessions with the Sales Department help align incentive plans with overall goals. Additionally, developing tools like dashboards for real-time performance tracking and maintaining an open-door policy for addressing issues and discrepancies can significantly enhance collaboration.

Sales Operations: Enhancing Efficiency
Sales Operations departments play a pivotal role in supporting and enabling the sales team. They provide the tools, data, and processes that enhance the team’s efficiency and effectiveness. To ensure incentive plans are effectively implemented and performance data is accurately tracked, Sales Comp Administration must work closely with Sales Operations. This partnership involves:

• Collaborating on plan design to deliver insights into what drives sales performance and operational efficiency.
• Establishing robust data collection processes.
• Developing an issue resolution system to minimize disruptions.

Human Resources: Policy and Compliance
The Human Resources (HR) department is another critical partner. HR is responsible for ensuring employees adhere to company policies and procedures that are often linked to legal compliance regulations and corporate people strategy. They often assist in plan design and implementation and are the first point of contact for employees with compensation concerns. HR provides reports on new hires and terminations, ensuring all are accounted for when calculating incentives. Best practices for working with HR include:

• Scheduling routine meetings to keep them updated on changes.
• Maintaining a relationship built on mutual respect.
• Being transparent during the plan design phase to ensure all changes align with company policies.
• Including HR in training events and providing them with FAQs about the plan to help address employee concerns effectively.

Legal and Compliance: Ensuring Adherence
Legal and compliance teams are crucial for ensuring that incentive compensation plans comply with relevant laws and regulations. Involve legal early in the plan design phase to ensure the plans meet all legal and regulatory requirements. Effective collaboration with legal includes:

• Conducting periodic audits with their help.
• Reviewing all compensation documentation, including employee agreements and administrative provisions.
• Preventing compliance issues to ensure smooth operation.

Payroll: The Final Frontier
The Payroll Department and the Sales Comp Administration team must work in close harmony. While Sales Comp Administrators handle the calculations, Payroll processes the actual paychecks. Depending on your organization, paychecks may be processed weekly, biweekly, semimonthly, monthly, quarterly, or annually. Establishing a partnership with Payroll involves:

• Creating clear communication channels to address upcoming payments and any issues.
• Aligning payment schedules.
• Developing a crisis management plan for handling errors or delays.
• Maintaining regular updates to keep Payroll informed about significant changes.

IT Department: Data Accuracy and System Implementation
Sales compensation administrators rely heavily on data managed by the Information Technology (IT) Department. IT is often involved in developing and implementing tools such as Sales Performance Management (SPM), Customer Relationship Management (CRM), and Enterprise Resource Planning (ERP) systems. Partnering with IT ensures:

• Data accuracy and proper implementation of compensation plans.
• Collaborating on business requirements, testing, and implementing plan changes.
• Developing advanced analytics and reporting tools to gain insights into compensation plan performance.

Accounting and Finance: Aligning Financial Goals
Collaboration with Accounting and Finance teams is also essential. These teams ensure that incentive plans are financially viable and align with the company’s financial goals. Establishing a feedback loop with regular touchpoints throughout the year involves:

• Discussing budgets, forecasted payments, and the financial impact of incentive plans.
• Using forecasting tools and cost models to make data-driven adjustments.
• Providing detailed reports on incentive payouts and performance for accurate financial reporting.

Learning and Development & Communications: Education and Clarity
Sales is a dynamic environment, often leading to changes in incentive plans. Collaborating with Learning and Development (L&D) and Communications teams ensures that sales compensation plans are well understood and effectively implemented. Effective collaboration includes:

• Joint training program development and creating customized role-specific training programs.
• Developing ongoing education materials to keep the sales force updated on any changes.
• The Communications team creates clear, consistent messaging aligned with the company’s overall strategy.
• Determining the best communication channels and visuals to disseminate information about the compensation plan.
• Providing regular updates about changes or enhancements to the plan to ensure all training materials are up-to-date and communicated in a timely manner.

Employees: Your Most Important Customers
Finally, remember that your most important customers are the employees. Pay is a sensitive topic, and resolving compensation issues quickly and efficiently is paramount. Early in my career, I learned the importance of being relatable and showing empathy when dealing with upset employees. Best practices include:

• Developing an escalation process involving HR, Payroll, Sales, and Sales Operations to address issues beyond the Administration team’s scope.
• Regular audits to identify and address potential issues proactively.

In summary Sales Compensation Administration is about more than just numbers; it’s about building strong, effective relationships across the organization. By fostering these partnerships, you can ensure a smooth, efficient process that benefits both the company and its employees. Through collaboration, transparency, and empathy, you can navigate the complexities of this field and drive success for your organization.

SalesGlobe is a leading sales effectiveness and data-driven creative problem-solving firm. We specialize in helping Global 1000 companies solve their toughest growth challenges and helping them think in new ways to develop more effective solutions in the areas of sales strategy, sales organization, sales process, sales compensation, and quotas. We wrote the books on sales innovation with The Innovative Sale, What Your CEO Needs to Know About Sales Compensation, and Quotas! Design Thinking to Solve Your Biggest Sales Challenge.