Change Management Lessons from the Sales Compensation Front Lines
With over 15 years’ experience changing incentive compensation plans for hundreds of companies across all industries, Prosperio Group consultants have seen it all when it comes to the highs and lows of implementing new initiatives. There are few topics more personal than compensation, and all compensation consultants learn how to manage the psychological impact of these changes early in their careers. This experience has led us to develop a tool that can be used for any change initiative, to help management chart a safer course through the treacherous waters of change management.
When rolling out a change initiative it is helpful to understand the psychology of the members of the affected group. The Vocality/Predisposition Matrix (VPM) (below) can help managers identify (before and after the change) those parties who may need some extra attention to get them over the hump of accepting the new program.
The value of this insight is the ability it gives management to get in-front of the challenges and opportunities these different types of employees offer. There are three critical times when management must use this tool:
When establishing the business case for change.
When preparing for the roll-out of the change.
When enacting the change itself, following the roll-out (especially in the critical first days).
Establishing the Business Case for Change
When preparing for a large change, whatever the topic, management should engage employees in defining the challenge and suggesting solutions. This can be done through surveys, but interviews can be more effective in allowing employees a chance to vent and to express their concerns about the potential upheaval the change may cause. We always recommend including one Vocal-Positive and one Vocal-Negative as part of the interview process for developing new ideas. It is particularly important to include top performers in this group as they will be likely to sway the Non-Vocal-Neutrals and they represent the greatest risk to the organization if the change is managed poorly and is the proximate cause for their departure from the organization. It is important to have the interviews conducted by a trusted neutral party who does not have hiring, firing, salary review or any other authority over those being interviewed. The interviews must be conducted confidentially and there must be enough conducted that outcomes can be reported without identifying the source of any particular comment. Findings should be reported in aggregate and should focus on things that directly impact the proposed course of action for the change.
Preparing for the Roll-out
Organizations go through all types of changes, from small group impact to organization-wide changes. Some changes are fairly impersonal (changing a corporate logo) and others are deeply personal (compensation and benefits). The type that will most benefit from the use of the VPM will be the initiatives that affect a contained group (such as your Sales Force) on a topic that naturally arouses passion (such as compensation) and where the risk to your organization is high if the change does not go well. This is why Sales Compensation is one of the front-line training grounds for anyone wanting to jump into the deep end of change management.
As management is organizing the roll-out, give consideration to ensuring the non-vocals will have time to be heard. For example, new sales compensation plans can be rolled-out with a high degree of pomp and circumstance at the National Sales Meeting in a large conference center auditorium or they can be rolled out in smaller groups over the course of several days. In either case you need to plan some one-on-one time with everyone so they can voice their concerns or issues outside of the group setting.
Generally groups with like interests should be kept together so there is limited confusion or discussion of topics that are not-relevant to a part of the audience. If management is slotting people into groups, consider splitting up the Vocals so you have at least one Positive and no more than one Negative in each group meeting. You also want a balance of the Non-Vocals, and you want to be sure to group Non-Vocal-Negatives with as many positive influences as possible. One of the fastest ways to suck the life out of your presenter is for him/her to look out upon a sea of employees with their arms crossed across their chests and read nothing but expressions of doubt, resentment, or downright hostility on their faces.
Another common mistake companies make is to schedule the roll-out and then allow key players to not be present. Some circumstances are genuinely unavoidable such as illness or an emergency but any significant change should be scheduled well enough in advance that the employees can work their vacation or discretionary time away from the office around the critical day or days. To the extent possible, the roll-out should be done live with as many affected participants as possible. In this world of increasing technology dependence, we forget the value of delivering news face-to-face. You cannot read body language in a webinar, and even if you have cameras set up, it is still not as good as the real thing. If the change is important to the organization, it is important to make the effort to get people together for it. A recent roll-out in Asia in which we were involved, while only affecting 30 or so sales reps, was still taken seriously enough by management that all participants, presenters and managers were all flown to Thailand to conduct the roll-outs.
For a particularly challenging change initiative, it may be a good idea to call in the reserves. Conduct a challenge team meeting of key team leaders, managers, and/or top performers. Give them a chance to help you craft the communications. It should be made clear that they are not able to change the direction or affect the content of the change materially as presumably those decisions have already been made. Enlisting their support before the change is communicated to the broader audience can prove invaluable when it comes time for the roll-out. This group will be primed with answers and will have had a chance to raise, and resolve, their key concerns and misunderstandings. If you plan for them to have a part in the official roll-out, this will visibly show their support, but even better is if their support naturally comes out during the roll-out in a more spontaneous and in a less scripted fashion.
After the Roll-Out
During and after the roll-out, be alert for who has changed camps. There will be some surprises as the topic for this change initiative may be something that causes a passionate response from one of your otherwise Non-Vocals. Or a Vocal may be having an off day and did not step up to the role you expected him/her to play. Be absolutely certain you have done your homework about how the change will affect each individual. One of the worst experiences is to roll-out a new program that you think will be well received only to find you have missed some critical piece of information, or had an incorrect piece of information. In the data intensive and minute detail oriented world of sales compensation, this happens with almost every roll-out. Someone’s salary was misstated in a data file, their productivity numbers were significantly higher or lower than what was used to model the new payouts due to a glitch or restatement in the accounting system, they have a signed letter from the Vice President of Sales promising them a certain minimum incentive payout, and other details. Obviously, once raised, these issues must be acknowledged honestly and addressed and corrected immediately.
You will need to plan for follow-up discussions with any high-performing Non-Vocal-Negatives immediately following the group meeting. They will be formulating in their heads the reasons why the new initiative will not work and you want to address these concerns directly, working through any misconceptions which there will be and legitimate concerns before they have a chance to express these feelings in semi-hushed conversations with their co-workers or via e-mail. If the change issue is pay, be sure you have your ducks in a row. You need to know what they have been paid in the past several years, how this new change is likely to affect them, and what they need to do to remain whole. Let them know you have already considered their concerns and put yourself in their shoes. If the change involves a shift in the mix of total rewards, be sure to quantify as many of the elements as you can so they are not left to “fill in the blanks” as to what the change really means to them. For example, if you are shifting to a more variable pay mix which means reducing base salaries, be sure you have transition plans ready and can explain how your employees are expected to meet their monthly expenses until the first incentive check comes. If you are instituting a different or more lucrative car allowance program, be sure you are up on the tax implications as what sounds “great” to you might not come across that way to your sales force, especially if they are the type that regularly puts greater than 100,000 miles on their car each year. Data is difficult to argue with so know the facts before having the meetings, and be genuinely compassionate about your employee’s concerns.
In the end, if handled well, the bulk of your organization will get through the change. You may have some heated debates with your Vocal-Negatives. And if they are in sales, negotiation is just part of their job description as you likely would not want them in the sales force if they did not try to negotiate for the best deal possible! Have the passion, the intelligence and, the leadership backing to stand toe-to-toe with them if needed. For others, the change initiative may be more than they can handle and may finally bring to a head the problems with their attitude. In the end, if your vocal-negatives cannot support the new system, then it may be time to terminate them as the damage these types can do to the motivation and morale of a company can be profound. Do not be timid about making staffing changes based on the VPM. It’s rare that a person with an inherently negative attitude is ever an asset to a company. An organizational change can be a great way to bring these issues to light and give you the ammunition you need to clean house.
This article was originally published in June 2013 issue of The Logistics Journal