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Compensate to Motivate

No question, channeling the energy of a sales team can be a challenging endeavor. But here’s an incontestable fact: How you compensate your reps determines where they invest their time and the results you get.

The incongruence of sales compensation is one of the biggest disconnects in companies. Executives sit in a boardroom with strategic plans of grandeur, but the plan collapses when they don’t address the compensation for the sales troops. This is a very simple equation. Your salespeople in-vest their time in activities that drive their compensation, plain and simple. Thinking they will actively and consistently perform activities that are not in their best financial interests is naive at best.

Further complicating matters, there are instances where salespeople are compensated for delivering certain results while their managers are compensated on a different set of results. Thus, the sales managers are driving their team consistently with their compensation message, but inconsistently with their sales team members. It creates the visual of the manager pushing a boulder up a hill, trying to get their team to focus on activities that contradict their income.

When structuring sales compensation plans, a company should strongly consider the goals for the company. Working backwards, the goals for the company drive the structure of the sales compensation plan. Thus, they should be directly aligned. If the company’s goal is to gain adoption of a new product in the marketplace, the plan should reward salespeople for accomplishing this feat. If the goal is to increase revenue with their current clientele, the plan should reward for that.

The second consideration when structuring compensation plans is that sales managers and salespeople should have alignment with their respective results. If one is compensated for adding new clients and the other for selling a new product to existing clients, and it does matter which is compensated for which, the incongruence causes a paralysis of performance.

Making this more daunting is the fact that in complex sales environments (those with protracted buying cycles), the standard salary and commission model does not create enough of a framework to ensure that the sales team performs the right activities daily. How do you structure the plan so that the team is motivated to do the right things?

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