All tagged Change Management

Creating a great incentive plan is not as easy as many people initially think. With the guidance of compensation expert, Beth Carroll, this 4 part guide will walk you through best practices for creating a great incentive plan while avoiding many of the common pitfalls.

One of the most vexing challenges when transitioning from one compensation plan to another is how to handle payouts for deals that occurred under the old plan. So, if your new plan starts on July 1, then all deals that close on June 30 should be paid according to the rules of the old plan. Things can get tricky when the crediting point or payout timing changes from the old to the new plan.

For some this is exciting, as it means the opportunity to earn more money. But for most it's an event that is met with skepticism and even dread. In some cases this fear is well-founded. If the reps work or have worked for an organization that has changed compensation negatively in the past, they might have developed a conditioned response to the communication of a new comp plan. If the reps have been treated badly enough in the past, and have gone through several negative changes, then the fear likely has morphed into indifference, disregard, disrespect and disdain.

An important step in many sales compensation design projects is the executive review. At this meeting the plan designs that you and your design team have worked so hard to develop during the past several months will finally be presented to the senior leadership team (sometimes called the steering committee or the executive committee). Ideally, the executives will ask a few pointed questions, conclude that you and your team have done a great job, and approve the plans as recommended. But sometimes an influential executive will challenge the fundamentals of the design or, even worse, the need to change the compensation plans at all, and the work of the design team seems to vaporize right there in the room.

Communicating changing sales compensation plans is never easy. The salesforce will always start with the assumption that the new plan is going to take something away and will be skeptical of anything the company tries to push as a "positive change." It usually takes two payout cycles under a new plan for the reps to figure out what behaviors they need to change to maximize their pay under the plan, and this is the point at which your top performers will finally stop holding their breath about the new plan design (provided, of course, it is designed well and truly rewards top performance in a fair and equitable manner).

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.