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Culture and Communication Are Critical Factors for Sales Compensation Policies

New Survey Looks at Trends in Compensation Programs and Practices

Nov. 1, 2016 — WASHINGTON, D.C. — The economic environment is driving sales compensation plans toward higher payouts for overachievers as well as increasing the role of incentives in the pay mix, according to a new study released today. “Sales Compensation Programs and Practices,” conducted by WorldatWork, a nonprofit human resources association and leading compensation authority, and underwritten by OpenSymmetry, an independent consulting firm and leading implementer of sales performance management solutions, surveyed several hundred WorldatWork members to gather trends in sales compensation programs and practices.

The survey dug into the critical factors that contributed to successful and unsuccessful launches of sales compensation plans. According to half of the respondents, the composition and involvement of the design team (50%) and gaining buy-in from sales managers through effective training and communication (49%) were critical to achieving success. When that buy-in from sales managers or sales reps was ineffective through poor communication and training, the survey showed mirror levels of not achieving success (47% and 53% respectively).

“The news these days is highlighting the importance of communicating clear expectations and having a strong culture of accountability in sales compensation, and with that, goals need to be set at a level where they’re challenging but attainable,” said Kerry Chou, CCP, senior practice leader at WorldatWork. “Effective communication is at the core of the top four critical success factors in this survey, whether through selecting the appropriate mix of professionals for the design team who understand the expectations and culture of accountability, having an effective goal-setting process, getting that buy-in from management or providing consistent messaging from management. It shouldn’t surprise us that when a sales compensation plan has an unsuccessful launch or execution, some of those same communication factors are revealed as lacking in this survey.”

The survey revealed that 71% of responding organizations use three or fewer performance measures in their sales compensation plans, with measures like total revenue and key sales objectives or milestones showing across-the-board importance for all of the salesforce.

David Blume, senior vice president of sales and marketing at OpenSymmetry, said, “As best-in-class sales teams push for more aggressive goal setting and higher rewards, simplicity in the sales plan design is key to tracking performance and shaping sales behavior in a more focused and impactful way. Highly complex sales compensation plans with too many performance measures can demotivate sales teams and contribute to rainmakers scattering their efforts amongst too many targets or just jumping ship, period. Furthermore, having a few key performance measures allows sales compensation plans to remain agile enough to change quickly in response to shifting corporate goals, industry tide, and regulations.”

Other notable findings:

  • 63% of organizations have documented policy guidelines that govern the process, manner and frequency against which sales compensation plans are reviewed.
  • 90% of organizations have a formal plan that details the governing terms and conditions for sales plans.
  • Ultimate approval to authorize change to the sales compensation plan lies with the top sales executive in 28% of respondents and the corporate president or CEO in 25% of organizations.

About WorldatWork®
The Total Rewards Association

WorldatWork is a nonprofit human resources association and compensation authority for professionals and organizations focused on compensation, benefits and total rewards. It's our mission to empower professionals to become masters in their fields. We do so by providing thought leadership in total rewards disciplines from the world's most respected experts; ensuring access to timely, relevant content; and fostering an active community of total rewards practitioners and leaders.

WorldatWork has more than 70,000 members and subscribers worldwide; more than 80% of Fortune 500 companies employ a WorldatWork member. Founded in 1955, WorldatWork has offices in Scottsdale, Ariz., and Washington, D.C., and is affiliated with more than 70 human resources associations around the world.

About OpenSymmetry

OpenSymmetry is an independent consulting firm specializing in implementing sales performance management solutions supplied by the industry’s leading vendors. With a client base of over 500 organizations ranging from SMBs to Fortune 500 companies, OpenSymmetry has been recognized as a pioneer in the sales effectiveness field for over a decade.

Founded in 2004, OpenSymmetry has headquarters in Austin, Texas, with offices in the United Kingdom and India. OpenSymmetry has been recognized by Inc. as one of the 50 Best Workplaces in 2016 and the Inc. 5000 Fastest Growing Private Companies in the US for six years in a row. For more information, please visit OpenSymmetry.

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