Comp Plan

I just got off the phone with yet another sales person freshly back from that annual pilgrimage to Corporate Happytown known as the company sales meeting. You know the scene: everyone packed into a hotel meeting room, yawning their way through one executive pep talk after another and dreading the afternoon break-out workshop where each group has to act out the new company mission statement using only action verbs or some other hair- brained thing. Throughout the session, each guy is vaguely panicked that at any moment it will be exposed in front of all their peers/most feared competitors and top management (aka deadweight) that they:

-tanked their number last year

-made their number but with the "old" products that have suddenly fallen out of favor

-are in danger of losing their prime territory to the new VP’s pet (from biz dev- great)

- got liquored up the night before and called the CEO’s exec admin a "hot tramp"

OK- Let’s put that on hold. I want a better feel for how many people are actually reading this before I start telling those types of stories…

What I wanted to describe, actually marvel at, is how often management will allow their sales team to leave this annual circus without fulfilling its only legitimate purpose: announcing a clearly defined compensation plan for the year.

Say what you want about salespeople, they are the easiest group of employees to  motivate and it doesn’t matter what your company does. There is only one metric--the number. It doesn’t get any more concrete than that. How much money did you bring into the company?

The document shouldn’t be anything fancy--in fact the more spreadsheet functions are required the more likely it was cooked up by finance and is therefore ripe for abuse--or worse yet, interpretation. The last thing a company needs is a bunch of naturally petulant salespeople making assumptions as to what they are going to be paid. MBOs and other nebulous activity metrics serve the same function- they are just loose ends that confuse the ultimate goal--go get money.

An effective plan just needs to answer the basic questions:

- Where am I selling (territory, vertical, opportunity size, under what bridge)?

- How much do I need to sell- and what products count toward that number?

- How much will I be paid, in American Dollars, when I hit that number and on what date?

Announce this plan and don’t materially change it for one year and you will eliminate 50% of all salespeople’s complaints. Good luck on the other half--if I knew that I would probably be presenting at your sales meeting.