It's a new year, and with a new year always comes new sales compensation plans. You might have already rolled yours out, but if you are like many organizations, January is the time for the annual sales conference, when sales reps gather to plan for the year and learn about changes to their compensation plan.
For some this is exciting, as it means the opportunity to earn more money. But for most it's an event that is met with skepticism and even dread. In some cases this fear is well-founded. If the reps work or have worked for an organization that has changed compensation negatively in the past, they might have developed a conditioned response to the communication of a new comp plan. If the reps have been treated badly enough in the past, and have gone through several negative changes, then the fear likely has morphed into indifference, disregard, disrespect and disdain. They've seen it all, heard it all and know exactly where the story ends: They make less money and have a higher goal to reach. And to make matters worse, management is going to tell them they should be excited about the change.
Effort Begins with Building Trust
This is where some real skill comes in for the HR manager leading the communication change, but the effort begins long before anything about a new compensation plan is presented. Communicating your new sales compensation plan begins with building trust. If the reps are treated fairly throughout the year, are given accurate information and have their questions addressed promptly and with respect by anyone on the HR staff or in finance or sales operations, you are a long way down the path of having a successful communication event because you will have built up trust credits throughout the year.
This doesn't mean that you always have good news to communicate to the reps. When you have bad news, it's best to be direct and clear about the issues. Don't try to make something wonderful out of something meager and don't mislead them about the potential for gain. They will see through it, and your credibility and their trust will be lost.
Of course, the easiest plans to communicate are those that provide genuine upside for most of the reps. For many, the change will be easy and they will welcome the additional earnings potential, but there will always be a few who resist change because it's change. Developing a good sense of what you can and cannot control is critical to the perceived success of the communication event.Â Some of the most common reasons for resisting a positive compensation change are unwillingness to pay more in taxes or the need to pay more in alimony or child support. You can educate reps on the former, particularly when the issue revolves around the timing of payments, but you cannot do anything about the latter. You need to accept that the new plan will not be a welcome change for these reps and move on.
Five Steps to Follow
For any plan, whether a positive or negative change is being presented, you should follow a standard communication process that involves these five steps:
Communicating your new sales compensation plan does not have to be as challenging as you might think. Taking the steps necessary to prepare will give the reps a clear and positive experience for the annual event.
About the Author
Beth Carroll is managing principal at the Prosperio Group, a compensation consulting firm that focuses on aligning pay with performance to help companies drive profitable growth.Â Â Â
Read the January edition of Sales Compensation Focus.
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