One of the key factors for Incentive Compensation programs to succeed is clear communication and presentation to different stakeholders in a structured manner. A company can design a great incentive plan but if it fails to communicate it effectively, it doesn’t necessarily meet the desired end objectives. The sales team does not understand the plan and misalignment disengages the salesforce.
Companies generally perform periodic assessment of their sales incentive plans to gauge the fairness perception of the salesforce and take steps to course correct for new strategic needs. Incentive Compensation plan communication however is not often given its due importance during IC program development. This impacts the overall effectiveness and success of the sales incentive program.
Business Objective Alignment
- What is the underlying business objective and how can the sales force be aligned to that objective? As part of the plan communication process, this is the most important question. Any ambiguity on this front is surely a recipe for the incentive plan failure. It is desired to keep the communication simple, link plan elements to sales strategy, be clear about changes from the existing plan.
- What is the appropriate messaging for different stakeholders? How can communication help achieve it? Several desired results need to be tackled while creating this messaging such as change awareness, incentive plan education, fairness perception, behavioral change.
- How can sales frontline leadership be involved in the design and communication process? This step ensures that the sales leadership buys into the new plan design and are comfortable aligning reporting sales representatives to broader business objectives. Sales leadership can be involved either through qualitative interviews or by conducting plan design workshops with them. If plan buy-in is achieved effectively with sales leadership the plan acceptance will be greater by the field.
- What are some of the channels those can be used for plan communication for different stakeholders? These channels may be pages within company intranet, emails, focus group discussions, sales leadership meetings etc. It is advisable to use multiple channels to provide context and to put emphasis on the why’s and how’s of a new plan. It is also important to define the rollout strategy in case multiple channels are employed for this purpose.
- How can we disseminate underlying incentive plan objectives and information to the broader sales leadership and to the operations group supporting ongoing IC operations? The objective should be to empower sales leadership and the operations group to resolve field queries in an efficient way. There are several ways this can be achieved – involving different stakeholders in the plan design process, creating detailed performance measure and payout calculation flows for easy understanding. It is really important to explain plan exceptions to both sales leadership and the operations group for speedy resolution to field queries.
- What are some of the additional avenues available to the sales force to improve their understanding of the plan? These may be achieved by online documentation, easy to carry plan design/payout table leaflets with crisp messaging, eligibility conditions sheet, payout calculator etc.
- How can we measure the success of the communication process? Feedback about a plan roll-out is critical and must be gathered in the form of surveys or rep interviews. Such a feedback loop can help companies understand which areas of plan communication they lag in and make appropriate adjustments.
- A rep’s immediate manager may be one of the best resources for the rep to learn more about the plan. Hence effort should also be spent in making the frontline leadership plan advocates and act as the first line of support.
- The plan ideally should be communicated within 2 weeks from the start of the performance period. Plan education is not a one-time process however. Ongoing plan communication can help align behaviours to business objectives better by encouraging reps to take full advantage of the various opportunities in an IC plan.
After plan communication, it is equally important to provide clear and concise performance reports for salespeople to track their performance with clear direction. These reports can act as ongoing motivators for the salespeople and can help them course correct their selling strategy if required to do so. This constant monitoring and tracking helps with the better understanding of the IC plan, engages the salespeople and motivates them to perform better.