Loud and Clear: The Four Pillars of Communicating a New Compensation Plan

If a sales organization designs a great compensation plan, but the sales team fails to execute it efficiently, is it still great? In my experience, companies often go through the difficult steps necessary to understand strategic needs, assess the current plan, and develop a better one. Once the new plan is approved, the whole design process feels like a job well done. In fact, the most important step is yet to follow: communicating the plan to the sales force. 

sales compensation plan communication

When you announce a new sales compensation plan to salespeople, do they ask the following questions?

Why is this new plan better than the old one?

What’s in it for me?

Why should we bother to go through changes (again)?

You’re not alone. But salespeople aren’t trying to make your life hard; it’s natural for them to wonder about changes that affect their daily activities and compensation. And it’s in the best interest of the sales organization to meet these questions with the right answers, at the right time.

Presenting a new plan is not only a necessity, but an opportunity to get salespeople on board, to motivate them, and to make sure the organization will accomplish its goals. You already have an eager audience, as salespeople will always be interested when it comes to compensation. So how should you go about communicating the plan in the most effective way?

At Optymyze, we recommend that clients adopt four fundamental techniques we consider to be pillars of communication:

sales compensation plan communication

  1. Describe the plan

Be clear on the “what,” and offer examples. What do sales reps need to achieve to be successful? Create scenarios to help them better understand how the plan works and more clearly envision the behaviors that the organization expects of them.

Sales reps are people who want to see and hear, not read and study documentation. Use examples, create rich visualizations, and present the plan in person.

  1. Validate the plan

Show the “how” of compensation. Explain the process behind the creation of the new plan, including details about the feedback you gathered from stakeholders, the assessment you made of the old plan, and the business objectives and market trends you took into account. Also, mention the people who participated in the design process, as involving respected team members helps validate the plan.

Reps may not always like a new plan, but you can increase acceptance by eliminating any perception that it came from a mysterious compensation black box.

  1. Motivate the team

Explain the “why” behind changes. Salespeople can execute adequately enough without fully grasping the reasoning behind changes. But understanding the big picture helps them move forward without losing sight of where they’re headed, and why. Nobody wants them to get lost along the way. To truly motivate your sales force, provide them with insight into the thinking behind the new plan’s design.

Think like your audience. Salespeople depend on the sales compensation plan for their livelihood. Make sure that reps understand how the new plan can help them achieve the best results. In this way, leaders show true empathy for their staff while leaning into the plan to turn business objectives into reality.

Compensation is about numbers, but it also determines what salespeople will do every day for the next year. Especially when you’re dealing with a millennial sales force, you need to show reps the bigger picture, the context and impact of their work.

  1. Ensure understanding

Have a dialogue. Communication is not a one-way street. To ensure your reps understand the new plan, gather feedback and questions. Train managers to answer any queries with interest and authenticity, and schedule one-on-one meetings with reps who feel shaky about the change. Also, provide a path to escalate problems and misunderstanding.

Lastly, don’t communicate once and then forget about it. Keep communication channels open. Gather feedback constantly, and make sure reps feel confident along the way. Hold managers accountable for how well reps understand and execute the plan, as they play a crucial role in carrying out your communication strategy.

Schedule Communication Wisely

Common advice suggests communicating the new plan before the beginning of the fiscal year. While that makes sense, it might distract salespeople who are working hard towards a strong finish on the current compensation plan. Timing depends on the specificities of your sales organization. Consider organizing a kick-off meeting with those in leadership roles early in the year; then, ask managers to conduct small-group sessions with reps to explain the details of the plan.

Above all, make sure communication is not an afterthought, but a well-planned process. Prepare documentation in advance and train the leaders and managers to thoughtfully deliver the message to the sales force. When communicated well, a great sales compensation plan sets the stage for a successful year ahead.

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.

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Chris Glass

Sales Director

Chris has nearly 30 years of sales and sales leadership experience. He excels in planning and executing high growth sales strategies of new and disruptive products and services into the EMEA market. Chris is highly regarded for recruiting and developing highly effective world class teams, while engendering a culture of collaboration and communication.

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