Tag Archives: Plan design principles

Basic principles guide sales comp design

In comp design, the possibilities are endless, but the principles are few:

  1. Ensure that the incentive offered is meaningful enough to drive desired results (but no so “meaningful” that problems arise with quality, integrity, etc.).
  2. Make the goals/ criteria for earning the incentive clear and explicit — and achievable. If goals aren’t seen as achievable, no one is going to reach for them.
  3. Align measures with top priorities for the company — remember that your incentive plan is a powerful communication medium. If you pay for activities, you will get activities. If you pay for results, you will get results.
  4. Document and communicate the plans well. Track and report more frequently than you pay. Publish the reports in an understandable format.
  5. Keep it as simple as it can be and still reflect the requirements of the business. In the tradeoff between Simple and Fair (meaning perfect reflection of value created by the employee), err on the side of Simple.
  6. Keep your eye on these principles, and consider revising the plan every few years. Your business priorities change, your messages to employees change — so should your plans.