5 Considerations to Design the Perfect Compensation Plan

Compensation is possibly the most important and the most contested part of the sales department.  Heads of sales, human resources, and finance often have different views of what is the optimal compensation structure.  While there are many ways to determine compensation, there are several factors that should be considered when designing your plan.



How Good Could You Really Be?

Have you ever looked up at the end of the year, see your numbers and thought you could have done better?  Even if you have had an outstanding year, if that July slump didn’t happen, or if that one big deal would have closed you would have sold and earned more.

The truth is that it’s not that one sale or that one slump caused you not to maximize.  Most likely it was the culmination of several acts that led to your final results.

You most likely hit a period of the year where you changed your behavior for the worse.

Sometimes success is our greatest enemy.  When things are going well we tend to think that our fortunes won’t change.  This causes us to become complacent with our actions, attitude, and strategy.  When this happens, we make ourselves susceptible for a slump, or off sales year.  While this happens to the best of us, there are certainly ways to minimize the risks.

Keep Your Focus:  When things are going well, we should not only keep doing them, but should maximize our efforts.  Ever hear the saying that the best time to make a sale is after a sale?  If you’re on a hot streak do everything possible to keep it going.  Do not change your behavior. (more…)

Create an All-Star Roster

Every person who works in sports tends to loves sports and most think they can be a general manager.  They read the sports pages and talk around the cooler about how lousy of a job the local team’s general manager is doing.

Think further about this.  If you are a hiring manager, aren’t you, in essence doing the same job as a sports general manager?  You are managing a roster of people who have a common task to achieve, right?  Haven’t you made that “can’t miss” hire who interviewed well but didn’t deliver on the (sales) floor?  And if you have a stingy HR department that is over processed, you may as well be working with contracted employees since you can’t move on the bad ones.  Seems like you might be stuck with the roster that you drafted (hired).  You’re doing the same job just in a different function, look at it that way and it’s not so easy to be a general anymore huh?

If you can avoid the Jamarcus Russell picks while assembling a mix of superstars along with some role players, you’ll be set.  Just like any GM would.  There are some tips to help avoid these pitfalls, read below. (more…)

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