The company had experienced several years of growth in its sales force and corresponding growth in its commission payouts, to the point where the company believed that pay was no longer aligned with performance. The company was worried that salespeople were becoming “complacent” with their earnings; in addition, it sought to better align its sales incentives with corporate objectives: sales growth, business retention and profits.
ZS studied historical pay results and industry benchmarks; we also interviewed members of the sales organization to understand how the field interpreted the current plan, and to identify areas for improvement.
Working collaboratively with a core client team, ZS developed a new incentive plan that included:
- Introduction of sales goals linked to payouts (a first for the company)
- Shifting compensation toward metrics that were in line with the company’s priorities
- Redesigning of the pay-for-performance relationship, so that top-performers were able to realize improved payouts
The introduction of sales goals represented a significant departure from the company’s prior compensation philosophy. ZS collaborated with the company to introduce goals over a period of two years in a way that solicited feedback and refinement from the field. Over time, the company’s focus on goals and pay-for-performance became so well-ingrained that these are now seen as fundamental to the sales culture.
In the first year, the incentive plan resulted in a significant pay increase for top-performing salespeople while adhering to ZS’s forecasted total incentive budget within 1%. Since the introduction of the new incentive program, the U.S. sales division proceeded to achieve its national new premium goal for six consecutive years.