“The approach to selling is different. The way of working and the relationships involved in the selling environment have changed.”
Realign your perspective
Think back to late 2019, early 2020. Many companies were planning or implementing their Q1 2020 sales plans and anticipating positive outcomes for the year. No sales force was stalled with the idea of global pandemics, lockdowns, remote working or vaccine mandates. Companies were not preparing to sell off property or worried about managing new health and safety regulations for their in-office staff. Compensation was always a discussion, but nothing out of the normal mode of yearly increases, bonuses and possible new incentives. Things were normal.
Authorities around the world and throughout the U.S. began to lock down, only authorizing essential workers to travel to essential places. Sales organizations had to leap to remote work. Fast forward to 2021, and many remote workers began to realize that working from home had its perks. Many employers realized that remote work was challenging but doable.
Now, sales organizations have adapted — or they are facing a wake-up call. “The approach to selling is different,” said Grant Thornton Advisory Services Manager Jeff Hauptschein. “The way of working and the relationships involved in the selling environment have changed. Retaining and attracting successful sellers is very challenging — especially high performers.”
Sales organizations must adapt to rapid change and seller realignment, whether they know it or not. Adaptation is being forced by higher comp and convenience expectations, talent wars, virtual business operations, health and safety measures, and a general unease about 2022 and beyond. So, how can employers intentionally realign their perspective for success?
Incorporate different perspectives
At the start of any sales compensation change initiative, sellers and their employers may be operating from different perspectives. Employees want a clear path to maximize their own earnings, and employers want to drive profitable growth by executing their post-pandemic selling strategies. Both are valid objectives and, if these perspectives are aligned, the sales organization has an opportunity to increase revenues, drive productivity, sharpen back-office efficiency and influence overall success.
The sales force wants to feel valued, so fair compensation goes a long way to accomplish that. Good pay, incentives and benefits helps to build and maintain confidence in the organization as well as in the products or services they are selling.
Employers can build confidence and trust by promoting an operating model that helps the sales force better understand their incentive structure, trust their compensation, and rely on real-time back-office support.
The employer’s goal is to keep the sales force performing at its highest potential, so there’s an opportunity to adjust sales compensation plans in light of the newfound realities of the “Great Resignation,” employee wellness, and a rapidly changing economy across workforce segments.
Pay and benefits are tied directly to these and other employment issues, so addressing them will work in the organization’s favor. Because commissions usually make up a large portion of a company’s income statement (liabilities), decisions must be derived from higher-level Financial Planning & Analysis (FP&A) efforts. FP&A should align with compensation plan design and associated sales strategies.
Update your plan with 3 factors
Once employers have realigned to understand the current marketplace and the supply/demand changes affecting their business, they will be better positioned to update their sales compensation plans. Effective sales compensation plans are actively managed and intentionally redesigned over the course of the quarter, half or fiscal year. If employers can embed a repeatable process and governance practices to enable a smooth, collaborative process from design to implementation to launch, the organization at whole is better positioned to create value and manage risk while staying agile.
Once a decision to make a change in sales compensation is made, taking action can involve 3 key factors.
Communication, review and flexibility are important elements for any successful organization that is confronting the changing business world, and they’re especially important for your sales compensation strategy:
1. Communicate to motivate
Communication is vital to success in almost every area of business, but many executives may miss opportunities to engage key stakeholders that manage different aspects of sales compensation. If communication around sales compensation changes, processes and procedures is ineffective, it can quickly and negatively impact employee confidence, motivation and productivity. It can also simply confuse sellers.
“Sales compensation plans are complex,” Hauptschein said. “They’re not as straightforward as they might have been in the past, for more limited, tangible goods and services in less volatile markets. Sales reps don’t always fully understand quota setting, nor the various components that make up variable compensation packages.” As plans become more complex, your organization might need to develop better tools and platforms for understanding and tracking performance from deal to payout. “The ability to understand how to go to market to beat the quota is always the game,” Lemke said. “So, without that logic and the right tools, the seller could be confused about aspects of the quota and become frustrated by it.”