If you have noticed in our posts, we are paying more and more attention to retention. (say that 10 times fast!) The employment market clearly indicates that it’s a hot topic.
Over the years, two compensation moves really set off the negative alarms in my mind. They also made me, as a sales manager, more aware of how compensation impacts salesperson performance.
Increased quotas.
When quotas are increased (which isn’t necessarily “bad”), the first thing I always looked for was the corresponding compensation. If the message was “We need you to sell more,”that’s fine as long as everybody in the organization wins. However, trouble developed when the message came through as “We need you to sell more and you’ll have to sell more just to make the same amount of money.” At that point the sales group had the perception of losing while be singled out as the sacrificial group within the organization. Bad move.
Commission rate changes/overall compensation.
Again, not necessarily bad, but potentially a dis-incentive. Any respectable sales person immediately reacted to a commission rate change by figuring out the impact on their personal compensation. If the changes appeared to be positive, the best sales people behaved accordingly. It’s called “working the comp plan.” If the changes appeared negative, well, another bad move. I fired up the sales hiring process since I knew I was going to lose someone, I just hoped it wasn’t my best salesperson.
May I suggest a good move? Ask individual sales people what topics the organization should consider when reviewing compensation. Done correctly, this type of input will have significant, positive impacts for sales management and ultimately retention.