Incentive Planning - Compensation of Sales

Incentive Planning – Compensation of Sales

Presuming that a team has efficient and talented sales staff, a manager needs to start addressing most of the factors that motivate a person internally. First, realizing the core internal motivators of the members in the team. Second, building an environment that brings out their best. In this step, the compensation of sales and planning for incentives is crucial to the planning process. Like the building blocks of the sales plan, it is important for the compensation plan to integrate the department of sales into the overall strategy of the company.

Advantages of a well-thought plan

A well-formulated plan helps in measuring performances, rewarding performers, and aligning the team. While it can sometimes give the impression that the entire process is being emphasized mostly on the financial point of view, the truth is that it creates great opportunities for a wide range of rewards that are not monetary in nature too. This can enhance the plan to a great extent and help in filling in the holes wherever required.

A newly appointed sales manager often feels that he does not have much to do with the planning part. However, they have a very significant role to play in the responses resulted by their department’s plan and the outcomes that follow. It is simply because they are the people that the management depends on to get the real-life scenario reports from.

The sales managers get updates from salespersons directly, so no matter what levels they are involved in the preparation of the plan, they can still find a number of ways, either direct or may be indirect, to contribute to their team’s success.

Benefits of a good compensation and incentives plan

  • A clear connection between the company’s plan and that other departments.
  • A clear picture of the roles played for sales within the company.
  • A definite job profile for the sales staff.
  • A precise framework for other employees to get good incentives.
  • The company’s capability for attracting and retaining its best employees.
  • The capability to motivate/demotivate some specific behaviours.
  • The internal and external reputation of the sales department.

The following categories affect the motivational level of sales subordinates working in a bigger ecosystem. Not only does this cover their surrounding culture, but also affects the business practices, procedures and policies within the workplace.

Let us have a look at these three important categories −

  • Corporate Category
  • Departmental Category
  • Individual Category

Compensation Of Sales

These three categories are the most important factors which can have an influence on the sales managers and their subordinates.

Corporate Category

At level one is the corporate category, which affects the things that show the work environment on a general basis as well as the image of the company. These factors include −

  • The Brand Name and the Reputation of the Company − Is the company highly spoken among people on the outside of the company? Does the reputation of the company lack something that has an influence on the motivational value and/or success drive of their team?
  • Cross Functioning Teams − Is the nature of the culture interactive? Do the employees get the chance for working with the employees from various departments? Are they levelled across the organization?
  • Package of Benefits − Is a good health plan offered by the company? Does the company provide any added services offered such as discount coupons, credit cards, etc.?
  • Working Circumstances − Is a good health plan offered by the company? Does the company provide any added services offered such as discount coupons, credit cards, etc.?

Departmental Category

At the second level comes the departmental category. This level has various areas that are a cross between corporates and departments, but the department may most likely have its own terms, conditions and cultural norms.

Departmental Category

While they may not be having so much freedom and flexibility around the policies of the company and the fields that influence every employee, they must have an upper hand in the factors which influence their department or their subordinates.

Some of such important factors are −

  • Do they conduct various contests between their salespeople, programs for recognition of employees or any other programs that are unique from the rest of the organization?
  • What is the nature of their department’s dress code; is it more formal or more casual as compared to the rest of the organization?
  • To what degree are the employees motivated, or to what level are they ambitious, as compared with one department to the other?
  • Is it anticipated from their sales staff to take part in general corporate meetings, or do they prefer working independently from the organization?
  • What are the ways in which compensation is being provided to their team players? Are there variations in the salaries and what factors cause them?

Individual Category

The third and the most narrowed-down category is the individual category. As we discussed above, salespeople can put their efforts on an environment that helps to motivate their team, but the efforts can never be generalized for everyone. In this place, the specific creation of various rewards and recognition has its role.

Managers should never be biased towards their favourite employees in terms of rewarding (that may be monetary or non-monetary), as this would be extremely discriminating, apart from being unethical at the same time.