Sales Performance Management Best Practices Blog

Happy LEON Day, time for a mid-year Sales Compensation Plan review

Posted by Jerry Hegarty on Tue, Jun 25, 2013 @ 16:06 PM

Today is LEON day (NOEL spelled backwards), the half way mark to the holiday season for many and is also the half way mark to the close of many sales teams plan year.

Given that such a timely milestone coincides with the middle of the typical sales year, it has us wondering; What are your ‘LEON day’ plans to perform a mid-year Sales Compensation Plan review this Summer? This is a prime opportunity to check whether the plans you made at the beginning of the year are tracking with the results you are getting mid-year.  50% of companies typically change plans each year. Occasionally, in year shifts may cause you to take a close look at plan mid-year. Its always a good idea to take a look in the mirror and ask yourself how effective your comp plans are. What does a mid-year review involve?Mid-Year Sales Compensation Plan Review

Take a sober look at where you are from a sales perspective. Improving Gross Revenue, product specific sales targets, Increasing Gross Margins or adding new logo’s to the customer list.

How is the current plan working?

Often we get so consumed by managing the monthly sales process that plan effectiveness is often left to an autopilot type of mentality. Now is the time to dial back the clock and consider where you were hoping to be at this juncture of the plan year. From an analytics perspective (this is where a Sales Performance Management Solution
really earns its keep), here are some critical questions to ask yourself at this stage;

  • Did you have mid-year goals identified at the start of the plan year? If so, now is the time to check progress against those goals.
  • What do attainment distribution curves look like at this juncture of the plan year?
  • Are your top 10% of performers tracking towards excellence (3X TVC leverage) ?
    • If not, what percentage, if any, is?  Are too many?
    • Is your compensation cost of sales tracking as expected?

Mid Year Change assessment;

  • Has strategy shifted in a significant way due to market or competitive pressures; are you r plan measures still relevant?
    • When upheaval occurs in the marketplace, it never seems to align well with the planning cycle for your sales comp plans.
    • Has the business undergone a strategic ‘pivot’ (to borrow a somewhat overused term) that should be affecting your thinking?
    • Are you able to retain top sales talent?
    • Are you satisfied with the level of plan complexity (number and understanding of plan measures)?
    • Do the quota’s you worked so hard on earlier in the year still make sense?
      • In cases where you may have missed the boat, are there tweaks that could be made which would improve the process?

Click me

The million dollar question to ask yourself is what to do if you find that your mid-year review uncovers situations which are troubling. Typically, wholesale mid-year plan changes involving new measures are frowned upon except in the most extreme cases. That said, there are times you may want to address significant issues that affect business performance or employee moral while still manageable and avoid having them fester for too long. Cross-functional meetings to build awareness to any situation and brainstorm possible solutions are an action worth considering. Elevating the issue within the organization is often the best first step. To help right the ship, Tools such as SPIF’s might be appropriate, tweaking Quota’s commonly occurs at this juncture as well. The bottom line is to be vigilant to the performance of your process and proactive about its utility as a performance enabler.

Topics: Sales Compensation Professional