Sales Performance Management Best Practices Blog

The Sales Compensation Process life cycle

Posted by Jerry Hegarty on Wed, Sep 11, 2013 @ 11:09 AM

When you  have 5 minutes (6:39 to be exact), Ryan Johnson's (WorldatWork) interview with Dave Chicelli (Alexander Group) is a great investment of your time.  While the 2012 interview is a bit dated , there are several theme's Dave and Ryan pull from the 2012 Sales Comp Trends survey data which are timeless. As a big fan of data based decision making, the fact that the insights are gleaned from data trends observed over a 10 year time span makes this all the more impressive.

WatW screenshot

Some of the high points include;

The Sales Compensation Process is imperfect.

In any given year;

  • 33% of respondents will claim their process is working really well
  • 33% will claim that their process is acceptable
  • 33% will claim that their process is unacceptable 
Sales Compensation Programs change every year:

In any given year;

Sales Comp plan life cycle

  • 20 % of program changes will be relatively minor 'tweaks'
  • 70 % of annual program changes will be 'material'
  • 10-15% will require a complete overhaul



Where your company is on this continuum will shift over time. You may find that while this year you think your process is outstanding, next year things may turn to unacceptable very quickly. If your program only requires small tweaks this year, there is a very strong possibility that material changes to your process may be right around the corner. In fact, one of these years there is a good chance you'll be facing a complete overhaul.

The picture that emerges is one that your Sales Compensation Plans have a life cycle and where you are in that life cycle may determine how satisfied you are with your process. If you are at a stage where small tweakls are all that are needed this year, the likelihood is high that you're probably quite happy with your process. If you are at the other end of the curve and needing an overhaul, chances are high that you are quite diossatisfield with the current process. Looking at this data, the expected lifespan of any Sales Compensation Process looks to be somewhere in that 4-8 year range.

Based on Dave's interpretation of the Sales Compensation Trend data, one recurring pattern which defines the Sales Compensation Process is that of constantly being challenged by change and that this change is what is driving the your process life cycle.

As always, the key to your ensureing the timely and accurate execution of the process is to put the right infrastructure in place that is scalable yet flexible which ensures that you will be able to deal with inevitability of constant change.

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Topics: EVP/Sales Leader, CTO, CFO/Finance Leader, Sales Compensation Professional, CEO, Human Resources, Sales Operations, Sales Professional