With all the craziness on Wall Street as well as the aftermath of Hurricane Ike for our friends in Texas, there seems to be more than enough bad news to go around. In an effort to help you avoid more bad news in the future, this month's newsletter provides a bit of preventive medicine.

As if life doesn't present enough of it already, this month's article focuses on change. Specifically, it discusses the challenges associated with sales compensation plan change and offers tips for managing a successful new plan rollout.

As always, I'm interested to hear from you. Let me know if you find this month's article to be of value or if you have any suggestions for future newsletter topics.

Best regards,

J. Mark Davis
Managing Principal
Valitus Group, Inc.

I recently worked with a client that had implemented four different sales compensation plans in as many years, the most recent of which, in particular, being poorly received. During interviews with sales reps, a consistent negative sentiment was voiced opposing yet another plan change. Unfortunately from the sales reps’ perspective, there were strong arguments for implementing yet another sales compensation plan change, not the least of which included as sense of entitlement and complacency in the field.

A recent WorldatWork survey of 416 companies indicated that 65% of participating companies implemented a change to their sales compensation plan for 2008 . Furthermore, a full 75% of survey participants indicated that they typically change their sales compensation plan almost every year. However, just because an annual sales compensation plan change is the norm doesn’t mean that achieving a successful rollout and obtaining buy-in from the sales force should be taken for granted.

Tips for Facilitating a New Plan Rollout

Here are some tips for achieving a successful sales compensation plan rollout which are relevant in an environment of either frequent or infrequent plan change.

• Make a strong business case for change. Change is often difficult. Making a compelling case for the need for change is a must. Articulate why the change is in both the company’s and the sales force’s best interest.
• Engage the sales force early and often. Salespeople need to be sold on the change. They need to have a voice in the process. There are numerous ways to engage the sales force, including one-on-one interviews, Design Team participation for sales management staff, update communications throughout the design process, pre-implementation focus groups, and post-implementation surveys. The point is, listen to your audience.
• Ensure that the change is meaningful. An old adage I frequently think of is ‘choose your battles wisely.’ Make sure the proposed change represents a battle worth fighting. If you view the change only as a “nice to have,” consider waiting until a greater magnitude of change is appropriate or necessary.
• Equip the sales managers. Provide the training and supporting materials needed to help sales management staff facilitate the rollout. I speak to the type of training needed in an earlier article entitled, Preparing Sales Managers to Lead (found on the Articles page of my website). Beyond training, necessary supporting communication materials will likely include prepared training presentations, detailed plan documentation, earnings calculators, and FAQs.
• Have sales leadership carry the banner for change. Once the sales management team has been effectively trained, they represent the best agents to lead the change management process with their teams. Leverage their credibility with the field to present the new plan to the sales force. This is not the role of HR and certainly not the role for an outside consultant.

The Fatal Assumption

Don’t assume the plan will sell itself. In my experience more sales compensation plans fail as a result of a poorly conceived or poorly executed implementation plan than for any other reason. Also, don’t be sequential. The implementation plan isn’t something that can be left to consider at the end of the sales compensation design process. Instead, the assessment and design process must be structured with the potential implementation challenges in mind. If, like most companies, you rely on your sales force to be the primary engine for top-line growth, then too much is at stake to leave the rollout of your next sales compensation plan change to chance.

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Mark now teaches the new one-day WorldatWork course, "Competitive Market Pay: Pricing Sales Positions," to be held on October 29 in Phoenix.
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Mark also is a contributing author to The Sales Compensation Handbook - Second Edition. Order this seminal text on Amazon.com.