Engaging C-Suite Executives in the Approval of a Sales Compensation Plan
By Jerome A. Colletti and Mary S. Fiss, Colletti-Fiss LLC
In many companies, sales compensation governance involves C-suite approval of the plan prior to implementation. The key to securing approval often depends on engaging C-suite executives — the chief executive officer, chief financial officer, chief sales officer and chief human resources officer — through an effectively illustrated and communicated presentation.
Over the years, the authors have observed hundreds of such presentations and found the three biggest missteps in selling a new or revised sales compensation plan to C-suite executives are:
- The core message is wrong.
- Questions from different points of view (e.g., finance vs. human resources) are not anticipated, nor answers to them prepared prior to the presentation.
- Potential holes in execution are not identified and addressed and, therefore, distract from new plan design and its expected outcomes.
The remainder of this article provides advice to help presenters avoid such missteps and position them to gain C-suite executive approval in a timely manner.
5 Tips for Selling a New or Revised Plan to C-Suite Executives
Many sales compensation approval presentations to C-suite executives involve a sales leader, an HR/compensation professional and a finance business partner. With that perspective in mind, here are five tips to help presenters win plan approval.
- Present a summary of required decisions first. While it is a good idea to provide meeting participants with either prereading or a briefing about what will be covered in the presentation, the authors’ experience shows that most C-suite executives will not give a great deal of thought to approval of next year’s plan until the proposed plan is presented to them. You want to do everything you can to make their decision making easier and more efficient. Thus, starting with an itemization of the decisions required sets the stage for the plan designs and financial models that follow. This should include mission-critical dates for each decision required.
- Describe the underlying business challenges that triggered the need for plan change. Few companies look forward to changing the sales compensation plan’s architecture because doing so, in the short term, is often disruptive to salesforce productivity. With that in mind, it is important to clearly state the business reasons for plan change. Often either the CEO or CFO will ask: “What behavior or performance are we not now getting that we believe will occur as a result of the proposed changes to the sales compensation plan?” The presenters should be prepared to answer that question using a sound rationale, and explain why next year’s proposed plan cannot be delayed.
- Summarize the plan changes succinctly. Most C-suites executives are not sales compensation technicians. It is important to lead with the things they care about: a) high-level findings about the current plan’s shortcomings; b) conclusions about which element(s) of the plan require change (e.g., a side-by-side comparison of current features and proposed new features) and why such change is desirable for the business, the salesforce and, ideally, the company’s customer; and c) recommendations — that is, the proposed changes that require C-level executive decisions.
- Provide a summary of expected outcomes from plan change. Typically, C-suite executives want to know two things about a proposed plan change: a) Will the change result in directing behavior and performance to the desired business outcomes; and b) what are the cost consequences of plan changes? Will the proposed plan cost more, less or about the same as the current plan if the same level of current-year performance is achieved? At what level of performance will we spend more, and is there management agreement that doing so is affordable to the business? Both expected positive outcomes and potential unintended consequences should be addressed. Thus, prepared answers to these questions along with supporting data are essential to gaining executive approval of a plan.
- Describe the implementation process that will be initiated after gaining plan approval. An important aspect of winning C-suite approval is to demonstrate that the organization has the capacity and capability to manage with the new plan. That means systems and payroll administration, performance management (e.g., the quota allocation process) and communications tools have been carefully considered. Also, it is wise to prepare and have available an implementation blueprint for C-suite executives’ review, if they are interested in that level of granularity.
Few changes to a current sales compensation plan are immediately embraced by C-level executives the first time they hear about them. To put yourself in the best position for securing approval, begin by giving executives a summary of what they will hear about in the presentation. Make sure you have data ready that support what you will say about the proposed plan; anticipate objections; and prepare responses to those objections prior to the presentation. Do not tell the C-suite executives what to do (e.g., “You should approve this plan because … ”), nor go for the “close” (aka, an approval decision) if new information comes to light that must be addressed before C-level executives are ready to make a decision.
The key to selling a new sales compensation plan is to be well-prepared. Keep in mind that you and your colleagues are there to supply the information that the C-level executive team needs to make the right decisions about plan change.
About the Authors
Jerome A. Colletti is managing partner at Colletti-Fiss LLC in Scottsdale, Ariz. He can be reached at firstname.lastname@example.org.
Mary S. Fiss is partner at Colletti-Fiss LLC in Scottsdale, Ariz. She can be reached at email@example.com.
Read the November 2012 edition of Sales Compensation Focus.
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