creating a sales compensation plan

Creating a sales compensation plan that wins over the c-suite

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Creating a sales compensation plan is no easy task. When it comes to execs and sales compensation – specifically, winning budget approval from the c-suite for your sales comp plans – it’s important that you know what leadership is looking for.

While many compensation leaders focus on technical aspects of plans, they often ignore a crucial step: How to sell it to the rest of the organization – particularly the executives who manage the sales budget and are accountable for the company’s success.

Here are a few tips to win approval from the c-suite for your sales compensation plans.

Learn the 5 steps to creating a sales compensation plan that wins over the c-suite

1. Embed company goals into every plan

The first and most important step in creating a sales compensation plan is ensuring that corporate strategy, goals, and objectives are reflected. The compensation design team should be at the table when defining company goals and objectives. To build the right plans, they need to know what products/services the company wants to grow, how the company intends to balance revenue and profitability, and whether a new go-to market strategy is paramount.

Ideally, include a cross-functional set of executives in the process of defining priorities. It’s much easier to “sell” a plan to the same group that developed it — the executive board, sales, finance, and the compensation design team.

2. Be bold and have a point of view

At a recent conference, a speaker offered advice to compensation professionals on presenting to the CEO. He suggested making a strawman proposal with a strong point of view. He also recommended keeping it simple and offering only two metrics in your proposal per plan – with an offer to go deeper if needed – for the CEO/president.

While many plans will ultimately have three to five measures, keeping them simple is the main goal and enables the compensation design team to demonstrate how the plans will motivate sales reps to meet corporate goals.

3. Tailor your proposal to the audience

A wide array of organizations need to align to the proposed plans, including finance, marketing, sales, sales ops, and IT. Ensure the proposal includes what each of these audiences needs to know.

For sales management, as an example, the proposal should explain how the plans help sales meet quota, and for finance, explain how margin requirements can be met. Like it or not, part of the process is building consensus and ensuring cross-functional alignment, which can take time.

4. Leave room for adjustments

Let’s face it: Not all plans will work as intended, and it’s likely that unforeseen events like acquisitions could derail even the best ideas.

Leave room in the budget for discretionary SPIFFs to help bring goals over the finish line in any given quarter – you’ll probably need it. Also, be sure that any SPIFFs offered don’t compete with the original plans.

5. Ensure your sales technology is up to the task

When creating a sales compensation plan, it’s important to ensure your organization has the correct tools so the comp team can easily pull the right levers to meet the original plan and make changes to it.

For example, different roles will need different incentives. In many companies there’s likely to be sales specialization and overlays, along with the potential for different considerations by geography. Having a sales comp system that easily supports these differences, including sales roles, lines of business, geographies, changes in the sales organization, along with crediting and paying folks, is key to achieving your plan and winning over the c-suite.

Are you ahead of your peers and competitors when it comes to sales compensation management? 
Discover the answers here. 

Barbara Rubis
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Barbara Rubis

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