BLOG HOMEPAGE

Ides of March: Is the Compensation Plan Betraying Your Strategy?

“Men worry more about what they can’t see than about what they can.” – Julius Caesar

March 15, or Ides of March, goes down in history as the day when Julius Caesar was betrayed and assassinated, as a result of a conspiracy of the Roman senators. The day marked a turning point in Roman history and has been an endless source of inspiration for stories both old and new. That’s because betrayal is infamous and fascinating. It’s a violation of confidence that comes unexpected and results in a conflict that fuels negative behaviors.

Dealing with betrayal is difficult, but not impossible. Identifying its causes, mending the broken trust, and taking measures to build a stronger relationship are the first steps towards overcoming betrayal.  And while we tend to think of it in terms of relationships, it can lurk in business processes as well.

As 2016 moves into its second quarter, have a closer look at your trusted compensation plan: has it remained faithful to your strategy?

compensation plan

Compensation plan design is an elaborate process that often takes a life of its own. Although organizations know that they should design the plan with the sales strategy in mind, they can lose track of the big picture while struggling to accurately compensate the sales force. And even with the best designed compensation plan, you should evaluate it periodically to make sure it stays on track.

Here is what to look for to make sure that your sales strategy doesn’t fall victim to the Ides of March:

Alignment Infidelity

Is your compensation plan unfaithful to your strategy by enforcing a different one? If your organization’s goal is to increase market share, but your plan is encouraging profit margin, you might find yourself in a pickle come the end of the year.

Look at behaviors in your sales force to see if they fit organizational goals. Reps’ monthly and quarterly objectives translate into organizational results, so make sure there is alignment between the two. Here are more resources to find out if your organization lacks strategical alignment and tips for dealing with the situation:

Is Your Sales Organization Strategically Aligned? 10 Questions to Find Out

Strategic Alignment at Work: How to Keep Sales and Incentive Compensation Plans on Track

Stab-in-the-Budget

Strategic alignment is the big picture. But often you need to take a deeper look to uncover possible problems. Even when your compensation plan is enforcing the right behaviors, it might not be doing a good job at staying within budget. Overpaying the sales force is a common problem that organizations face as a result of faulty plans.

To prevent your plan from stabbing your budget in the back, proactively analyze how reps are being paid. Look at past performance, market reality, and desired outcomes to strike the right balance cost-wise.

Product Disloyalty

Another source of betrayal often comes from lack of focus in the compensation plan. Let’s say the organization is looking to sell more of product A. The company also sells product B, which is not a priority. However, reps have an easier time selling product B because it’s cheaper, so they focus on it in detriment of product A.

What companies will do to push a specific product is introduce contests and SPIFFs. However, these should be an exception, not the rule. A well designed plan will efficiently incentivize reps to focus on what your organization needs to sell, rather than take the easy way out.

Deceiving Reports

Analytics and big data are hot topics. But few organizations manage to use them effectively. Reports that contain too much data or the wrong metrics can lead to executives taking bad decisions.

sales analytics

To avoid deceiving reports and reap the benefits of efficient plan analytics, choose solutions that accurately collect and analyze data. Also, work with experts. People who have experience in your industry can help you identify the right metrics, focus on what’s important, and take decisions based on accurate reports.

Is betrayal lurking around your strategy? The good news is that you can see it. With a vigilant eye and the right clues, you can prevent problems in your compensation plan from taking you by surprise.

Learn How to Model Incentive Plans for Sales Excellence

Download our guide to see the impact of sales compensation plan modeling, details on varying approaches to modeling, and use it to make adjustments to your plan before roll out.

Get it here >

SEARCH ON BLOG

NEWSLETTER

Don’t miss any of our sales operations tips! Subscribe to receive a weekly summary.

Thank You!

You have successfully subscribed to Optymyze's Sales Operations Insights blog. For more sales operations best practices, check out our Learning Resources Library