Every year we find December to be a fertile time for sourcing salespeople. One of the biggest reasons – the upcoming year’s compensation plan. More specifically, new commission plans tied to new quotas. The salespeople receive the new plan and are, well, disgruntled. Or ticked off.
Good salespeople tend to look outside for new opportunities when their commission plan gets over-adjusted following a strong year. Let me speak clearly here – I am all for raising the bar, but you do have to take all factors into account before setting the new targets.
ManageSmarter.com offers up this article – Fast Track Your 2008 Sales Compensation Plans – with 10 tips for streamlining your comp plans. Point number 1 is crucial (emphasis mine):
1. Keep it simple.
A straightforward plan makes it easy for reps to see how they’ll be paid. Don’t confuse and demotivate your reps with plans that try to do too many things. A plan is considered too complex if there are more than three to four performance metrics in the plan, or 10 or more conditions exist to determine credit allocation and payment release. Complex plans are hard to administer and maintain: They make it difficult to set up plans, to generate accurate results, and to timely respond to inquiries and disputes from sales reps. This can cause significant payee satisfaction issues.
I see that rule broken more times than you can count. I’ve been a sales rep under a complex plan where we had to have multiple meetings at the end of each quarter to reconcile the amount. My sales manager and I would spend multiple 30 min. meetings going back and forth on our “interpretation” of the plan and the commission owed.
The adverse side effect was the fact that even though I was making very good money, I was frustrated by the quarterly battle I encountered. I usually felt like I had been slighted even with the sizeable check. Talk about demotivating.