Inconsistency between plans and strategy negatively affects productivity and can result in lower sales and higher costs: you spend a lot of money driving the wrong behaviors, and even more to correct them. To avoid this, sales strategy and compensation plan alignment is crucial.
Here at Optymyze we have worked with clients from various industries to help them maintain strategic alignment and drive desired sales behaviors. This experience has helped us pull best practices which I want to share with you here. It’s useful to keep them in mind while you’re planning for 2016.
An important thing to understand from the get-go is that aligning strategy and plans is an ongoing task. Your business changes frequently and your plans must keep up.
Also, keep things simple and remind everyone that they need to focus on what’s really important.
My colleague already made this point, but I want to reiterate because it’s crucial: ensure a clear understanding of the strategy company wide. Spend time actively explaining where the company is heading to all levels of the organization. If your goal is to gain market share, go into details about how you’re going to achieve it. Translate strategy into actionable goals for the sales force.
It’s not enough to communicate strategy once. Reinforce the message throughout the year and test understanding from time to time: pull some managers aside and ask them to explain strategy and what they’re doing to execute it.
Also, establish a rhythm for monitoring plans. You made some assumptions when you designed the plan. It’s time to see how they are working out. Dedicate resources to monitoring and make sure it happens regularly. Create a feedback loop that results in actions. Depending on the issues you identify, rethink your communication with the sales force, or even plan a big overhaul of compensation for your next cycle.
Another best practice is to enforce clearly defined exception criteria.
They also erode company culture and decrease motivation. Exceptions might be in conflict with the compensation plan and could undermine your efforts. To avoid this, first question if an exception really needs to exist. Second, build clear rules to manage exceptions.
Related to this is my next piece of advice: use contests and SPIFFs sparingly. Just like exceptions, these can be a distraction and might drive undesired behaviors. Reserve contests and SPIFFs for when they are really necessary and you want to push for a specific action. Establish clear timelines for contests and make sure they are not in conflict with the core plan.
If you’d like to find out more on this topic, I go into more details in this webinar which is available on demand. Also, check out this infographic to find out if your organization is out of alignment.