There are normally three phases of a sales compensation project, Diagnostic, Design and Implementation.
The Diagnostic Phase starts with establishing a Steering Committee, Design Team and Project Manager. The Steering Committee’s responsibility is to charter the Design Team, develop the Philosophy that will guide the this team, resolve any hurdles in the way and finally approve the plan.
This would develop the recommendation based on their specific insights and experiences and they would present the recommendation to the Steering Committee. The Project Manager executes the work plan and is the liaison between the groups. Communication protocol would be in place, such as communicating to the field and the rest of the organization and scheduling routine updates to the Steering Committee. Qualitative activities would have been conducted such as interviews, focus groups, ride-alongs and/or surveys. Here is where alignment of the sales model elements would be scrutinized. Quantitative activities would be a pay and performance analysis including performance correlations and pay distributions. Additionally, competitive pay analysis would have been conducted. Both of these analyses are critical and are inputs for the Design Team session. The qualitative and quantitative insights are packaged into findings, assessment and directional recommendations and presented to the Steering Committee. Then they decide whether a Design Team is needed or not.
Assuming there is a green light, the Design Team is chartered and the Design Phase is initiated. The first step is to develop initial compensation plan design principles and initial straw model sales compensation plan design. This team is then educated on what has been communicated to the Steering Committee and they are educated on sales compensation design. The Design Team then recommends a sales compensation design that will be tested through cost modeling. Cost modeling uses historical pay and performance data and projects what the payouts would be for the new design. When completed, the recommendation along with a high level implementation plan including risks is presented to the Steering Committee for approval.
After approval, the Implementation Phase is initiated. An Implementation team is selected that could include members of the Design Team and could also include field resources that were interviewed in the Diagnostic Phase. A detailed implementation and communications work plan is developed and executed. Some of the steps include developing transition plans and developing communication materials such as plan documents, one-on-one meeting materials, incentive calculator, sales manager guidelines, training, etc.
By John Benson