May 30, 2024

Deadly Sin #18: Failure To Effectively Communicate The Sales Comp Plan


Randall Bolten and Bob Berry

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…

Deadly Sin #18: Failure To Effectively Communicate The Sales Comp Plan

Yes, yes, yes, I know that most senior executives would rather have a root canal than give a presentation about commission plans, but it’s really important, for the following reasons:

• It’s a gesture of respect. When a member of senior management presents the comp plan, it shows that they recognize the importance of paying the sales force fairly and well.

• Incentive compensation should be a key part of any enterprise’s strategy. What better way to demonstrate that than by having the commission plan presented by one of the executives critical to developing that strategy?

• It’s part of the pep talk. A key reason for the sales kickoff is to get the sale force charged up for the upcoming year, and you want them just as enthusiastic about their personal financial opportunity as they are about the company’s prospects.

• It helps to ensure that senior management actually understands the commission plan! Many comp plans fail because they weren’t adequately reviewed and discussed beforehand. Since no senior manager should present something he/she doesn’t understand, this may help prevent that type of failure.

It may be asking too much to have the CEO or the VP of Sales give the presentation, but certainly in smaller companies the responsibility for presenting the compensation plan can lie with the CFO, or with the head of human resources (if he/she is competent to explain it). In larger companies, the presenter should at least be a direct report to one of the C-level executives.

A critical part of delivering a great comp plan is communicating it properly and effectively. Take that responsibility seriously.