If a sales organization creates a great incentive compensation plan, but the sales team fails to execute it efficiently, is it still great? Companies often go through an entire process of assessing the current incentive compensation plan and adjusting it or creating a new one to align with the latest strategic needs. But they often rush into rolling out the changes without a clear compensation plan communication, which is key to the overall success of their sales compensation program.

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.

Communicating a compensation 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 sales compensation management. So how should you go about communicating a compensation plan in the most effective way?

Here are some tips for clear compensation plan communication:

1. Be clear on the “what,” and offer examples

What do sales reps need to achieve to be successful? Create compensation plan 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.

2. Show the “how” of compensation 

Explain the process behind the creation of the new incentive compensation 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 plan creation 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.

3. 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.

clear compensation plan communication

4. 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.

5. Have a dialogue

Communication is not a one-way street. To ensure your reps understand their compensation 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.

6. 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 compensation plan communication strategy.

Above all, make sure compensation plan 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 clearly, a great sales compensation plan sets the stage for top sales performance.

Learn how the Optymyze solution for Sales Commission Management helps organizations like yours effectively communicate new or updated sales commission plans to their salesforce.

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