This month's article offers insights into how to effectively launch (or re-launch) a new incentive plan in order to keep your employees engaged and motivated in spite of the doom and gloom that dominates today's headlines; I hope you find it valuable. Don't hesitate to share with me the topics you'd be interested in reading about in future newsletters.

Best regards,

J. Mark Davis
Managing Principal
Valitus Group, Inc.

• Alignment with business strategy – A change in business strategy will likely signal the need for a change to the sales compensation plan. Even if the business strategy isn't changing materially, take the opportunity to re-articulate the organization's business objectives and the role of the sales force in achieving them.



• Cost modeling – Any plan change must be considered in the context of the projected cost of funding the new plan. This should be done in the context of both the aggregate cost to the organization as well as the potential impact to the individual salespeople.



• Goal setting – For goal-based incentive plans (i.e., a bonus or goal-based commission arrangement), the plan will be judged largely on the basis of one's perception around the fairness of the performance goals. Make sure you're able to set reasonably accurate performance goals.



• Sales management on-boarding – Provide the training necessary to make sure the sales management team is on board in terms of the desired sales behavior the new plan is intended to drive as well as how to leverage the plan to manage their teams.



• Plan documentation – This is an important reference document that details all of the specifications of plan. One of the most important sections of any plan document defines the terms and conditions that govern how the plan is administered. The Terms and Conditions section, in particular, should undergo a legal review. For more insight on the plan document, refer to an earlier article I wrote, entitled Properly Documenting a Sales Compensation Plan."



• Supporting communication materials – These often include presentations for introducing the new plan in a group setting as well interactive earnings calculators that give participants the ability to enter various performance scenarios and see the resulting incentive earnings automatically calculate.



• Plan administration capability – A company's IT resources must have the ability to administer incentive payments under the plan (hopefully using something other than spreadsheets). It may be too late now, but this is why it's a good idea to engage an IT resource in the design process.



• Plan B planning – Plan for the unexpected. Things change. When they do, will you know how to respond? I advocate establishing a sales compensation plan governance team that meets at defined intervals (typically on a quarterly basis) to evaluate year-to-date performance and pay results and determine whether changes to performance expectations or the incentive plan are warranted.

Driving the desired sales behavior through the sales compensation plan requires effective planning and active monitoring. The environment is too dynamic; there is no auto pilot. Plan for success; plan for the unexpected; stay nimble.

Attend Mark's "Sales Compensation Math" workshop based on his book of the same title at the upcoming Sales Performance Conference, May 4-5, in Philadelphia. (Get details...)

Mark now teaches the new one-day WorldatWork course, "Competitive Market Pay: Pricing Sales Positions," to be held on June 10 in San Jose.
(Get details...)

Mark also is a contributing author to The Sales Compensation Handbook - Second Edition. Order this seminal text on Amazon.com.