Right Organizational Structure For Sales Performance Management (SPM) Operations
Author: George O’Connell
I have observed a wide range of organizational structures for Sales Performance Management (SPM) operations. Compared to any other organizational operation, SPM operations are somewhat an oddball because there is no single department in the organization that is a natural fit to take full ownership. Roles and responsibilities are often undefined and spread across multiple functional groups. There isn’t a standard best demonstrated structure that fits all businesses. The SPM operational responsibilities are by and large split evenly between the HR, Finance, and Sales Operations teams.
To ensure the most effective practices, the organizational responsibilities should be assigned to the most qualified, and experienced resources available in the organization. Anticipated business changes, in addition to the existing workload, should be a factor in deciding how to build SPM organization.
If, at any given time, a particular department needs to focus their attention on other critical business issues, they should be excused from SPM’s operational responsibilities. For example, HR may be dealing with high turnover, core HR system installations, or a lack of experienced resources needed to manage programming staff. Likewise, Finance and Sales Management, and Sales Operations will have their own specific challenges. In fact, Sales Operations may be viewed as too closely controlled by Sales Management to be appropriate gate keepers for commissions and bonus payments. Nevertheless, each one of the organizational options can be designed with all the appropriate management controls.
The right resources in any one of the three departments can produce excellent SPM operations results. For most companies, an evaluation of current talent and performance is needed to select the team with the highest probability for success. Once the dedicated SPM operations group has been selected, it can function successfully under the guidance of any one of the three departments.
The following three steps will help guide a company through the organizational set up:
SPM Advisory Board
The company should setup an SPM advisory board to oversee and approve changes to compensation plans and processes. The approval process will involve many aspects, such as legal issues, HR compensation policy, cost analytics, strategic financial decisions, sales management objectives, systems capacity, security, performance issues, etc. The senior advisory board should be the governing body that makes the final decisions for all SPM related projects and investments. A well functioning board will give the SPM operations team clear and timely direction so they can deliver effectively on companywide pay for performance objectives.
The senior leadership group should be comprised of representatives from HR, Finance, Legal, Sales Management, and Technology. Once the most qualified department is selected for direct SPM responsibilities, the board should monitor the performance of the dedicated team responsible for all SPM operations. The most senior SPM manager should have a seat at the advisory board meetings.
Once the SPM organization is formed, the detailed responsibilities and scheduled interaction with the advisory board should be documented. Every company should put together a RACI chart to outline various functions involved in SPM and clearly define responsibilities and ownerships around these. Sample RACI Chart can be downloaded here. The best SPM organizations have “end to end” process responsibilities–from data capture, vendor management, SPM system design, plan development, pay calculations, testing, and reporting, to on-going support. Effective management of these end to end processes insures that the SPM team delivers accurate and timely results critical to maintaining excellence in sales performance.
Another important role of the SPM team is to keep the advisory board apprised of systems development, data or calculation issues, company sales payout trends, resource requirements, and all other operational factors impacting pay plans, projects, and cost.
Flexible Staffing Model
SPM operations usually require close interaction with the company’s IT organization, HR payroll staff, Financial Planning, Sales Management, New Product Marketing, and Legal departments. Due to the quick turnaround requirements, and the impact of revised or new annual compensation plans, SPM is best managed with a flexible resource pool.
Incremental resources from other departments, vendors, or outside consulting firms are frequently required to meet project deadlines. It is unlikely that a cost effective Sales Operations team can deliver a new compensation plan within 60 to 90 days using only in-house staff and management. SPM organizational resource needs are fluid, project based, and sometimes seasonal. The quality and timeliness of the incremental resources are often critical to the success of delivering pay for performance responsibilities.
In summary, org structure for SPM operations is unique for every company. An SPM advisory board can provide guidance and decisiveness. A RACI chart helps clarifying who does what, and creating a flexible staffing model will ensure an effective SPM operation.
About the Author: George O’Connell has on premise and SaaS expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes design, development, operations, governance, and analytics for a company with $2.5 billion in sales to over 500,000 customers. He has managed SPM operations for a wide range of sales channels including telephone sales, sales executive channels, union contracts, new business start-ups, call centers, third party vendors, sales management plans, and director / sales VP compensation.