By: Matt Tyre, Director, Client Services

Recently I participated in a study conducted by a business school that looked at influencing factors that motivate sales people. Motivation factors could be positive or negative as viewed by sales people. For example a Pay & Rewards can be motivating if performed effectively by companies or the opposite can occur. Sales people may be completely demotivated based on a poor program that doesn't provide expected pay & rewards for performance and results. The choices by organizations impacts the total rewards mix and the success of the company and sales force.

So what are motivating factors affecting sales people (in order)?

1. Pay & Rewards
2. Achievement
3. Personal Life
4. Relations with Customers
5. Relations with Colleagues
6. Work itself
7. Job Security
8. Status

What were standouts from the list that had more positive influences in motivation was Personal Life and Relations with Customers. These two factors clearly showed that sales people are motivated and find little issue in these areas.

Personal achievement does motivate sales people, but almost equally will demotivate if underachievement is a trend within your company.

What factors are de-motivating the sale force?

1. Recognition
2. Growth Opportunities
3. Company Policy & Admin
4. Career Progression
5. Responsibility
6. Working Conditions
7. Relations with Supervisor
8. Supervision

Not providing enough recognition for individual or team achievement can make for a negative work environment. Recognizing your sales people is one of the largest motivating factors and can influence the desired behaviours that a company seeks from their employees.

Company Policy & Administration ranked in the top three demotivating factors, however the majority of the feedback was negative, making this a bigger issue. Many companies have cut back resources and stretch resources thin over the past decade. One of the impacts is sales people responsible for their own administrative tasks and proposal which tie up much of their time and keep them from performing selling activities. As organizations have put this pressure on their sales people, they need to consider the competencies required for these administrative tasks, as well as the impacts of sales people not actively selling to perform administrative tasks.

Survey Author: Beaumont, Paul, Anthony - DipS, MCIM, Chartered Marketer (Mature Student, MA Sales Management, Portsmouth University)

Survey participants: 632

Sales compensation programs need to have consistency across an organization as a whole. Typically a framework is developed to create the alignment across multiple business units and within the job functions. With this approach you provide the individuality that each business unit needs, but holistically the company has a similar structure in their comp plans.

There are two levels in the framework process. First is looking at the company as a whole and then looking at each business unit's:

• Business Goals and Objectives
• Strategies
• Tactical Execution and;
• Key Performance Metrics

The second level is taking this information and looking at the key elements in each business unit. Some elements included in Sales Compensation Frameworks:

• Sales Roles
• Pay Mix
• Metrics for Measurement
• Performance and Payout Frequency
• Individual/Team Measurement

When designing a framework you can take a basic excel spreadsheet and build a table. The table should be presented in a way that you can compare the jobs and the differences in mix, individual or team metrics, and the performance and payout frequency. When you build your framework you should see some consistency in some of the measure/metrics, except the variability by role and level of responsibility. An example would be to have a sales rep focused on individual gross margin sales and a manager being rewarded on the sum of all sales for their sales reps and for their region in gross margin sales. The consistency in the design will unfold and should ultimately tie back to the business goals and objectives for the company and their business unit.

We posted a blog recently trying to justify the role of each department in the sales compensation design and communication process. We received several observations and mixed opinions; now we would like to hear from YOU! Who do you think owns the sales compensation responsibilities?

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By: Matt Tyre, Director, Client Services

Tuesday was an exciting, and illuminating, day of discussion at the Toronto Board of Trade. Sales Resource Group hosted a sales compensation planning session for the upcoming year and some interesting discussion came out in the seminar-closing round table. Many questions were asked about different industry issues and trends; however one question seemed to be the hot-button topic of the day, who owns sales compensation; Sales or HR? With a varying group of professionals from industries such as office supplies, retail, telecom and financial services, the response was one that didn't settle the debate concretely. The mix from the group was exactly 50-50. So it seems that sales compensation is an entity that's ownership hovers between Sales and Human Resources. Some groups were transitioning the ownership from Sales/Sales Op's to HR, which doesn't set any trends, but may be an indication of where some organizations believe the responsibility belongs.

The relationship between both HR and Sales is critical in the success of the incentive compensation program and executing sales strategies. As companies invest millions in incentive payouts it is important that the roles and accountabilities are defined. The key is to ensure that all departments provide value in the process and have responsibilities for the outcomes. Ownership lies with each group fulfilling their obligation to the process and knowing what they are accountable for.

Here is a list of key responsibilities by department:

HR

• Compensation Plan Assessment
• Compensation Plan Recommendations
• Compensation Plan Framework Development
• Conceptual Plan Design
• Compensation Plan Modeling
• Final Plan Development
• Plan Document Communication
• Plan Communication to the Field Sales people (in collaboration with Sales) – Supporting Role

Sales

• Develop Sales Strategies and Communicate to HR
• Review and Approve Recommendations - Ensure Alignment with Strategies
• Review and Approve Framework - Ensure Alignment with Strategies
• Review and Approve Conception Plan Design - Ensure Alignment with Strategies
• Provide Targets to HR for Document Communication
• Approve Final Plans
• Plan Communication to the Field Sales people (in collaboration with HR) – Lead Role
• Review Performance vs. Targets

Finance/IT

• Access to Data
• Confirm Available Metrics for Plan Designs
• Costing of Incentive Program (Finance)

HR/Sales Op's/Finance/IT (Depending on the organization)

• Calculate Commission and Bonuses

Obviously, responsibilities vary by organization. The list provides guidance to what departments own which elements in the process. As you can see, mo individual department owns the design process; instead it should be a collaborative effort to ensure the strategy of the business is met. Where it becomes unclear in most organizations is who owns the calculation process. Who manages calculations, adjustments and approval of the calculated incentives? We have seen this vary from all departments (HR, Sales, Finance, and IT) but whoever owns it, is accountable for providing timely and accurate calculations to the sales force. This critical piece may require involvement from all the groups to complete the fulfillment of payouts, which is the most important aspect to the sales person. If your sales people are delivering on the desired behaviour of the plan and the payout process is managed effectively you will have a positive sales environment for your company.

By: Matt Tyre, Director, Client Services

Here are 5 HR/Sales incentive compensation terms to communicate more effectively with your sales people in your plan documents.

1. Target Total Compensation (TTC) - at 100% performance what a sales person can earn.
2. Interpolated - paying in between performance tiers.
3. Strategic Initiative/MBO - qualitative or quantitative performance measure.
4. Threshold - meeting a minimum expectation of performance to earn an incentive.
5. Holdback - holding back a portion or all of an incentive until performance milestone is achieved.

Welcome to our new blog and website,

This will be an ongoing, informative blog concerning a wide-range of topics. Sales Resource Group executives, sales people and developers will contribute to this blog periodically to provide prospective on sales, compensation or technical issues facing numerous industries.

Also, the team at Sales Resource Group Inc. is excited to announce the launch of their new website. We have significantly upgraded many sections of the website, as well as added additional sections to provided clients and prospective customers with a wealth of knowledge from our sales compensation experts.

These upgrades are all part of our attempt to be a full-service solution and industry leader in the sales and incentive compensation industry. Please take a moment and navigate through our new site to experience all that Sales Resource Group has to offer.

Thanks,

The SRG team