Happy New Year! Over the last few weeks, we've talked about the hard work needed to implement an effective incentive compensation plan. We reviewed the spreadsheets to make the numbers meaningful, and the documents that put the plan into plain English. All that remains is the most important task the presentation to the sales force. The presentation should be only 8-10 slides and should accomplish two thing: (1) EXPLAIN, and (2) SELL.

1. EXPLAIN. Never assume you audience has read all that stuff you sent them. This is your chance to make sure everyone understands at least managements key initiatives:

  • The basic logic underlying the plan
  • How the plan relates to the company's central strategy and objectives
  • The extent to which underachievement is penalized and, more important, over-achievement rewarded
  • How the plan will be administered and payments made

A walk-through of the basic calculations, and examples of three or four scenarios, will really assure the target messages are received.

2. SELL. After stock options, incentive comp plans are by far the most expensive benefit most companies, especially high-tech high-growth ones, offer. For that kind of money, they need to be powerfully effective. So a powerful presentation should be one of the centerpieces of the sales teams annual kickoff meeting. Without overselling the plans potential (or at least not by too much), this presentation should:

  • Get the sales force charged up
  • Reiterate the companys vision and mission
  • Tell the sales force that they are an essential and respected part of the enterprise

That last point makes it essential that the presenter should be as senior as possible. Ideally, the CFO or the worldwide sales VP, even the CEO should be standing up there. At the very least, the presenter should be senior to all the comp plan participants in the audience. Having some analysts and bean-counters in the room to explain the details is fine, but as the main presenters they send the wrong message.

This discussion illustrates the 80/20, in spades. Maybe even the 90/10 rule. Creating and giving an effective presentation is a tiny fraction of the effort involved in implementing comp plans, but it makes all the difference in how effective those plans are in contributing to your company's success.