As the calendar year winds its way towards the fourth quarter, sales compensation planning for next year is looming on the horizon.
In my 15+ years of selling, I don’t recall a single time when my incentive plan was the same from one year to the next. Why? Because the unpredictability of top line revenue creates the need for “strategic decisions” to be made in order to hit the number next year.
- Didn’t generate enough new revenue last year? Increase quotas!
- Over budget? Cut commissions!
- Want growth in new markets next year? Add in some kickers!
Stop it. You are thrashing. It will cause turnover and lower morale.
There is a great joke Jerry Seinfeld tells about the nature of men when it comes to women.
“We like women. We want women, but that’s pretty much as far as we’ve thought. That’s why we’re honking car horns…yelling from construction sites. These are the best ideas we’ve had so far!”
Companies are a lot like this when it comes to comp. We haven’t thought far enough in advance to create compensation plans that align with corporate strategy and make sales reps happy.
- Can we attract and retain A players with the current comp plan?
- Does our plan compete with market rates?
- Are we paying our top producers 3X what we pay our bottom producers?
- Does our plan reward the right performance?
- Do our reps like and understand the plan?
- Does our plan align with the company’s strategy?
There are 4 ½ months left in the calendar year. Don’t be like the guys in Jerry’s joke. Take the time now to objectively assess your sales compensation plans for next year.