Sales Compensation Focus

Answers from the Experts

What is the biggest challenge sales compensation professionals face today?

"Sales compensation has grown extremely complex in global organizations with multiple delivery models. Just the basic premise of pay for performance gets muddy on some of these huge deals where large teams of people sell solutions that include hardware, software and professional services. Many of these organizations and teams are a collection of disparate salesforces from recent acquisitions, and there isn't a single philosophy to guide a unified compensation approach. 

It's really tough for the sales comp professional to be strategic in this instance due to the daily issues requiring attention. One group needs a comp plan for a new, inside sales team. Another group wants to pay a team for a multiyear, managed services agreement that isn't factored into the quota. The job can be a thankless one that, at best, goes unnoticed because nothing blew up in the past 24 hours.

Certainly one of the biggest challenges is in framing the issue and solution approach in a way that's strategic and sustainable. Usually this comes when a crisis forces some fundamental change. Think of the banking industry after the 2008 financial crises; from this crisis came a new system of governance that transformed the way most banks now design and manage their sales compensation programs. 

Across many industries today business is strong and there is no crisis forcing change, yet all around us are symptoms of some larger, unattended issue.

  • Why are we paying 60 people on a single deal?
  • Why is our sales comp expense 110% of plan and our revenues flat?
  • Why does it take 90 days to pay the enterprise team on a services deal?

In an age of big data, many comp professionals struggle to answer some of these basic questions. 

Years ago I invited a colleague to attend a conference focused on sales compensation strategy. 'I'd love to join you Scott, but I don't have the time. My group is dealing with tons of exceptions, our systems don't work; we can barely get people paid,' he said. I convinced him to attend and the conference became a transformative event. He shortly thereafter challenged the company's leadership to develop a sales compensation philosophy, new system of governance and invest in technology to streamline and automate commissions accounting. Years later he gladly accepted my offer to co-present at another conference. He had a good story to tell around big change and sustainable results. He even developed most of the slide deck for our presentation.

His message was simple and timeless: Define what good practice is, aspire to get there and show progress. It takes a strong-willed sales comp professional to convince the company's leadership that now is the time to change, and that something as tactical as sales comp has significant, strategic implications."

Scott Barton, Associate Partner, Aon Hewitt

"The biggest challenge for sales compensation professionals that I continue to observe is the ability to build credibility with sales and executive leadership, in order to ensure a proverbial 'seat at the table' as a trusted adviser.  

In 2014, most business sales objectives and targets are not new in a macro view … they are usually set around growth, profitable growth or growth with some additional consideration of the company balance sheet. Therefore sales compensation design topics are generally the same topics as in the past.   

However, the real opportunity is to be seen as a trusted adviser to the business, which means a keen focus on being proactive, seeking collaboration, demonstrating expertise, doing your homework to gain knowledge of the business and its objectives, and of course understanding the sales roles.

Don Hubbartt, Senior Director, Compensation, Siemens

"Prior to the economic downturn of 2007-2008, plans were more focused on driving revenue/profitability with less consideration on risk balancing and tail risks associated with employee behaviors. The last 3 to 4 years have seen an increase in regulatory oversight prompting organizations to focus their attention on developing incentive plans which not only demonstrate best practices, but are also appropriately risk balanced. Thus the challenge to sales compensation professionals today will be to manage business expectations of not reverting to historical design and philosophy, but to maintain the "new" standard (e.g., best practices and risk balancing), while being seen as a trusted adviser."

Richard J. Burtner, CCP, PHR, Vice President, Incentive Governance & Design, American Express

"Keeping sales compensation plans relevant as 'go-to-market' models rapidly evolve and the demand for higher ROI on sales compensation expense increases."

Rick L. Butler, Senior Director, Sales Compensation COE, Cisco Systems

Read the May edition of Sales Compensation Focus.

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