Sales Compensation During Turbulent Times

Rahul Iyer

Sales compensation may not be top of mind during these turbulent times, but it does affect a number of people in the front lines of business, including your sales organization. So leaders do need to pay attention to it.

Sales compensation levers can enable established sales organizations to support and retain sales talent. The most successful compensation levers introduce the ability to adjust the expected outcomes with alternative success criteria.

These can be achieved by:

  • Putting in place short-term quota retirement accelerators for scenarios, like a new logo
  • Adjusting compensation rules to support compensation payout on booking and invoicing (in addition to customer payments)
  • Incentivizing behaviors with spot awards
  • Instituting recoverable/non-recoverable draws
  • Giving employee retention bonuses for top performers
  • Shifting metrics and KPIs to activity-based compensation
  • Putting more focus on customer retention and renewals
  • Accelerating payout rules to support sales employee retention
  • Reviewing and adjusting sales targets

While all of these levers are useful in most scenarios, the sector where the business operates may determine the efficacy of specific options.

A successful sales compensation exception strategy is built on understanding historical data and trends. With ever-changing sales uncertainties, you must build the exceptions into the financial models to arrive at the organization’s financial tolerance. The human element comes in as leadership from operations, sales, finance, and total rewards come together to form a sales incentive task force. The task force needs to study the modified models to identify affected sales individuals and roles.

They then need to determine the most affected sales personnel by taking into consideration other metrics like tenure, level, total target compensation, prior year achievement, and territory composition. This will provide sales leadership with a clearer picture of affected personnel and allow them to be mapped to various available options. Communication from leadership is paramount, as any confusion among the sales ranks on the purpose of this exercise could have unintended impacts.

Make sure to revisit and track these exceptions on a periodic basis to measure them against the allowed financial tolerances and alter them as needed. In this pandemic, when the duration that companies will need to keep these exception rules in play is unknown, you need to develop your best practices for continuous improvement. Any plan should have built-in flexibility to support ad-hoc scenarios by territories and teams.

While these suggestions are not meant to be exhaustive, they should be a good template for organizations of any size to start thinking about how to use sales compensation to retain the best sales talent as they navigate through these difficult times.

COVID-19 has put the entire world in turmoil. Learn more about “Living Through A Crisis.”

Rahul Iyer

About Rahul Iyer

Rahul Iyer is Director of Presales for the Customer Experience organization at SAP. Rahul has spent last two decades addressing challenges as a developer, solution architect, principal consultant, solution captain, and thought leader in the sales performance management space.