5 Tips to Manage Annual Changes to Your Sale Incentive Plan
By: Dan Ganse, Spectrum Technologies
It’s that time of the year again, the leaves are changing, pumpkin lattes are back, and you’re starting to hear about changes to next year’s sales incentive plan.
You could sit back and wait and for these changes to find you, hope that they’re small and will be easy to make…but if you’re wrong, you’re setting yourself up for long days and a late program rollout. It would be wiser to seek out these changes now and carefully analyze their impact on the current IC system.
Here are 5 tips that will help plan for next year:
1. Start Early
An IC steering committee – typically formed with HR, sales, sales operations, finance, and other stakeholders – often decides on the annual plan changes. And it’s not uncommon for major changes (e.g., new data sources driving new metrics) to take 2-3 months to implement. It’s also not uncommon for this group to finalize these changes in mid/late December. Failing to anticipate these changes will only put pressure on your timelines and the quality of your initial payroll and other deliverables. And making mistakes – for any reason – will take you 3-6 months to regain credibility.
2. Run It Like A Project
The key to managing annual plan changes is to make the stakeholders recognize what the key deliverables are to a new plan year rollout. Push the steering committee to provide final compensation plans as early as possible.
Communicate timelines to all stakeholders early and publish and track dates to reinforce dependencies and accountability. Establish a weekly meeting with all key stakeholders to share timelines, assess project risks, and resource plan for all roles (HR, support, IT, etc.). If you’re planning to engage a vendor to help with your changes, secure the resources early on. Don’t wait for the final plans to be ready as you’ll need to account for enough time for the vendor to plan their own staff and ramp up on your requirements.
3. Model the New Plan
Modelling the new plan is crucial to ensure that the plan behaves as expected. Monte Carlo simulation (running repeated simulations with random sets of data) can be particularly helpful to gauge the financial sensitivity of the plan. You’ll want to understand how the plan behaves under a variety of conditions in order to (1) adjust the plan if the behavior isn’t desired before you launch and (2) serve as a baseline and reminder later in the year when discussions arise to change the plan.
4. Archive Old Components
Too often, little or no time is spent archiving or removing unused components (rules, data, reports, etc.) The reasons for not doing this are many – you assume this is a feature of your IC system, you don’t have enough time to do this and make the required changes, or it simply didn’t occur to you to do – but the consequences of not “pruning” these unused components is a more complicated system that is harder to understand and make changes to.
Be sure to allow for time to archive and remove unused components from your system to keep as clean as possible. Doing so extends the overall life of your IC system, keeps the processing speeds faster, and allows for faster configuration changes.
5. Communicate to the Salesforce
Your company is spending a lot of money on sales incentives. Don’t assume that just because you implement the changes requested that the salesforce knows what those changes are. And just because you updated the Terms and Conditions of the plan for the new year, that also doesn’t meant the salesforce understands the plan or changes made to it.
Each and every year, it is essential to remind and educate the salesforce on their sales incentive plan. This can be accomplished through a variety of ways such as testing and certification, road shows promoting the plan, sessions at a national sales meeting, webinars, on-demand videos, and more. The key is that a concerted effort is made to remind, educate, and drive home the sales plan’s key metrics and overall corporate strategy of your organization. Doing so, drives the performance of your sales organization and strong ROI in your sales incentive plan.
This is always a busy time of year, where you can be pulled in multiple directions. Don’t let next year’s sales compensation needs sit idly by – take the time to prepare for what is to come. Make it a good 2015!