Sales & Marketing Management - January/Februry 2008 - (Page 31) and the behavior that the plan out without getting value in actually rewards. Years ago they return, so their influence on plan were much simpler in design: design ensures that the relationDo this and get that. But they’ve ship between reward and behavgrown so much more complicatior is clear to everyone. Because ed because employers tried to do of their diligence and rigor, many too much with them. So many reps now know exactly what other factors have been introthey’re going to get five minutes I’m brought duced to drive other behaviors after they close the deal. into a company to help that most sales reps don’t really them with their comS&MM: What suggestions do you know how their own comp plans pensation planning, have for companies that want to work. get better results from their motiBy trying to do too much, there’s often a very vational and incentive planning? they’ve weakened the connecbasic flaw—a disconnect MATTHEW LUCY: First, ensure tion between behavior and between the behavior that what you define as “perreward. If a sales rep doesn’t formance” is clearly rewarded know exactly why he gets what that the employer in the compensation plan. For he gets, you haven’t affected or wants to encourage, example, if you tell your team encouraged any behaviors at all. and the behavior that that you want to drive volume Also, companies change their the plan actually growth in the overall customer high-level strategies about every base, but the plan itself only other year, but continue to use rewards.” rewards for new accounts, you’re the same compensation strucmotivating your team to focus ture, which creates the disconsolely on attracting new clients rather than keeping nect between the company’s goals and the behaviors it the current ones happy. What you want to achieve isn’t rewards. But even worse than ambiguous, complicated and outdated incentive plans are the ones that necessarily the behavior you’re rewarding. Second, involve your finance department as early in introduce manager discretion. the planning process as possible. That will help them understand the impact beyond dollars and cents and S&MM: Why is that a bad thing? Shouldn’t a manager understand the strategies you’re employing. And in have the right to use his or her best judgment for unusuturn, their detail and financial rigor will ensure that the al or exceptional cases? rewards you develop are properly tied to the behaviors MATTHEW LUCY: Not when it comes to comp you want. Don’t think of the finance department’s planning. It’s absolutely important that managers have the opportunity to make subjective judgments, involvement as a chore, but as an advantage. Finally, do a retrospective look at your current but comp plans aren’t the place to do that. It’s critical that management doesn’t just throw out the comp comp plan to determine what incentive payment each rep received—not in terms of dollars, but as a percentplan and pay out whatever they feel is appropriate at the end of the year, based on their observations. age of revenue that the individual generated for the company. Those large payments that go out to the Keeping things appropriate, objective and measurable are things that finance does very well, which is why top-selling reps often turn out to be less expensive in the long run than the little amounts that go to salestheir involvement is so critical. They worry about people who aren’t doing the right things. whether an inordinate amount of money is being paid “When www.salesandmarketingmanagement.com JANUARY/FEBRUARY 2008 SALES &MARKETING MANAGEMENT 31 http://www.salesandmarketingmanagement.com
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