I run a recruiting firm called 121 Silicon Valley, and we are always asking ourselves “What does a VP of Sales look for in a Startup?” So I sat down with Steve Sovik, Chief Revenue Officer at Tipalti, a fast growing provider of software to automate supplier payments. Before joining Tipalti, Steve spent five years as SVP of Sales at Coupa Software, where he led sales growth from essentially nothing to over $80+ million. Randy Bolten*, former CFO at Broadvision joined the conversation.
We often hear senior management wishing their sales force would deliver “boring” results. They dream of a sales team that’s on auto-pilot, with monotonously consistent on-plan results quarter after quarter. Some companies even offer a “consistent performance” bonus for sales reps who meet all four of their quarterly quotas. But in our view, those companies are committing…
If your company has a December 31 fiscal year, you’re probably in the throes of finalizing your 2017 incentive comp plans. So in the spirit of avoiding the most egregious compensation errors, let’s revisit the Deadly Sins we’ve discussed on this site over the past year or so (for links to the original blog posts, click on the numbers):
As suspicious as I am about spot bonuses (see “Deadly Sin #4 – Too Much in ‘All-or-Nothing’ Bonuses”), we’re in the year end holiday spirit, so even we CFOs are willing to make exceptions. Use one-time rewards to recognize behavior that you might not normally see in your sales reps – or your customers/prospects. Here are some examples:
We depart temporarily from our tour through the Deadly Sins of Incentive Compensation to talk about a more difficult subject: what happens to a sales rep’s commissions if he/she leaves the company. We all hate to deal with this sort of thing, but let’s face it: sometimes a clearly drafted “last will and testament” can save everyone a lot of hassle and heartache.
Welcome back to our series on the Deadly Sins of Incentive Compensation. As is often the case, many best – and worst – practices are obvious, but we sometimes need a reminder. In this post, let’s look at a Deadly Sin that is less obvious, at least if you go by the number of times it’s committed, and that’s…
As we near the midpoint of the sales year – at least for December 31 companies – it starts to become apparent who the really big producers are, and just how much they might be earning this year. It’s a good time to re-examine your sales commission plan if you’re one of those companies that’s commits….....Deadly Sin #5 – Capping incentive compensation..
Designing great comp plans is mostly a matter of common sense. But once in a while, real mathematics rears its objective, unsentimental head, and when you ignore the math in those situations, you do so at your peril. An example of this occurs in plans that may result in…
We all know that bad hires are expensive. In fact, that’s become a cliché, and clichés don’t motivate or impress. So in this blog, let’s look at what a bad hire really costs, in actual dollars. We look at a sales rep, the position we know best. The costs of a bad hire – and the savings (yes, there are some) – include:
In the last few weeks we’ve blogged about staggered quota quarters (click here and here to see those posts). We followed it up with a survey on the subject, where we learned that the real problem that staggered quota quarters are intended to address – that is, quarter-end bottlenecks in business execution – is clearly a significant issue. And it’s an issue that may not be getting the attention it deserves.
Accelerated commission plans are a powerful management and motivational tool. But if you don’t plan for them properly, you can have some ugly surprises when its time to write the checks or to explain your results to your investors.
Q: When setting up stock option plans, what are the biggest pitfalls startups face?
A: That’s an excellent, and important question. Stock option plans are by far the most expensive benefit that startups can offer their team members, so the most important objective is to make sure they are actually perceived as truly valuable. Two perceptions potentially fatal to that objective are:
In our recurring series on the Deadly Sins of Incentive Compensation, so far we’ve focused on the sins of plan delivery – that is, the errors made when documenting, communicating, and administering comp plans. In this post, we return to the sins of plan design – errors resulting from flaws in the way we structure the plans in the first place. Here’s one of my “favorites”:
In last week’s post, we looked at staggered quota quarters, a novel approach for smoothing out the rush to close business at quarter-ends and balancing the enterprise’s workload. As a former Sales VP myself, I would love to see those results. Making sure that those results actually happen is a management challenge, and the Sales VP plays a key role there.
This month we step away from the Deadly Sins of Incentive Compensation to discuss a truly interesting suggestion about quota structure, from the Sales VP at one of our clients. At his company, regional sales quarters are staggered, so if there are, say, three regions in the company, each region’s quarters end in a different month. Here’s what that company’s quota quarters might look like for fiscal 2016 (with a 12/31 fiscal year):
Right now, Senior Sales management and staff are getting ready for the most important sales meeting of the year: the sales kickoff. Held in the first quarter by most December 31 companies, a key element of every sales kickoff meeting is laying out and explaining the upcoming year’s sales commission plan. This topic brings me to…
Now is the time when companies, with December 31 fiscal years, start thinking about next year’s compensation plans. And sometimes, so does your sales team.....
Our recurring series on the Deadly Sins of Incentive Compensation will sometimes focus on plan design choices that appear sensible at first glance, but on further consideration are expensive and ineffective. Here’s one of my “favorites”...
Well-designed incentive compensation plans – especially sales commission plans – are a powerful way to motivate great performance. But they’re also easy to screw up, and the results are plans that not only fail to motivate, but are incredibly expensive. With that in mind, with this post we start a recurring series of blogs on the 121 Silicon Valley: The Deadly Sins of Incentive Compensation. So let’s start with Deadly Sin #16 – Changing the plan significantly every year, or even more frequently.