Incentive Compensation Design & Goal Setting
Drive company strategy and increase field motivation through effective incentive compensation design and goal setting
Incentive compensation greatly affects the motivation and morale of a sales force. When designed and implemented successfully, incentive plans propel sales force performance to higher levels. When done poorly, incentive plans misdirect sales force energy, cause loss of sales, and can lead to sales talent drain.
Given the typical dispersion and autonomy of sales people, the incentive compensation (IC) plan is one of the key tools sales management can use to communicate organizational expectations and influence behavior. When married to an effective administration process, a good compensation plan can have significant impact. ZS helps clients answer questions such as:
- How can the many competing objectives for the IC plan be balanced, so that the plan drives company strategy, yet is also simple, motivational, fair, and financially responsible?
- How can the IC plan be simplified so that it is well understood in the field?
- What can be done to address the problem of payouts either exceeding or falling short of budget due to sales exceeding or falling below forecasts?
- How can the plethora of Sales Promotion Incentive Features (SPIFs) or other extras that are continually added to the IC plans be controlled, or better designed?
- How can territory-level goals be set so that they are fair and achievable?
- When should the process of designing new IC plans begin, and how should the process be managed in order to deliver the new IC plans to the field on time?
ZS has designed and implemented sales compensation plans for sales representatives across multiple countries. We help our clients achieve:
- Motivational and understandable IC plans that are aligned with company strategy
- Financially responsible IC plans and goals where there is a strong pay for performance relationship
- Robust processes to ensure contribution from key stakeholders and on-time delivery of the IC plan
- Governance to help control the number of new features added to the IC plan over time
The ZS approach to compensation plan design and associated goal setting follows a systematic process that couples experiential knowledge with analytical rigor. Experience dictates the importance of involving all stakeholders in the design process and jointly establishing the objectives of the compensation plan. Quantitative assessments, benchmarking, and pilot studies are part of the analytical rigor employed to make sure that the new compensation plan meets client goals. On-going procedures for program governance assure the program’s continued success.