Author: Neal Hudson
Without a vibrant and successful sales process, even the best and most efficient product won’t translate into value.
When I started working with a commissions team, my first thought was, “How hard can THAT be?” Anyone who has taken the time to read this far already knows that answer. Once a business grows to the point of having staff that are dedicated to nothing but selling the product or service, human nature kicks-in and the need to properly and fairly incentivize that staff is essential.
As many of us do, I am guilty of avoiding management books found on airport newsstands. The exception for me was Michael Lebeouf’s assertion in his book, The Greatest Management Principle in the World. Simply and elegantly stated, “Things that are rewarded get done.” The implication being, if people aren’t behaving the way you would like, you are most likely and inadvertently reinforcing the wrong things.
When it comes to sales compensation, a flexible, scalable, and most importantly, automated system is imperative to recognize and quantify how sales staff responds to compensation programs. If your data is scattered about the organization, and data integrity is not strictly enforced, the value of that data and time to produce any analysis is greatly compromised. The ability to tightly integrate a sales compensation system with source data, and to quickly implement plan changes, are essential to any coordinated sales effort.
That said, and as I’m sure you already know, a highly functioning, automated system does not alone translate into a successful sales effort. Certainly, a well implemented one is just as important. After spending many years working in various roles within commissions for a major U.S wireless communications company, here are some things that I have noticed.
Accurate HR system data
Firstly, it’s important to point out that implementing a reliable, automated system can bring some additional, and perhaps unexpected benefits to the organization. For example, prior to integrating the commissions system, HR data often significantly lagged organization changes. However, when timeliness directly affected pay, keeping that information accurate and up to date increased in priority and the entire company benefited from accurate HR system data.
Fewer disputes, more selling
Secondly, in order to take full advantage of an automated commissions system, it is important that results are both timely and completely accurate as perceived by the sales staff. The best outcome is for the sales staff to completely trust their reports so they don’t waste considerable time and effort tracking their own sales and results. While a certain amount of that is to be expected, 100% of that time would be much better spent selling!
Compensation systems are only as good as their data
Lastly, it is critically important that compensation elements can be solidly supported by incoming data. One pitfall I saw was the temptation to the sales organization to implement new elements that couldn’t be accurately determined from existing data with the caveat that any fallout would be “handled through appeals." Acknowledging the need to quickly roll out a new product or compensated activity, this inevitably undermined confidence in the system on the part of the payees and lead to increased self-monitoring of sales, and even in some cases, potential gaming of the system. This can quickly become more costly than taking the time and effort to ensure the accuracy of the supporting data. To reiterate what I said above; it's very important that a great commissions solution, like SAP Commissions, is implemented well so that admins cannot try to compensate on events that are known to be immature and flawed on the data side. Luckily, automated solutions help guarantee transparency, and a "paper trail" that legacy systems or Excel cannot.
A high quality, scalable, and tightly integrated sales commissions tool is truly indispensable for an efficient and effective company. It is equally important that said system be configured to operate consistently and with a focus on accuracy and flexibility for rapid change.
If you have any other questions about sales compensation, please reach out to our team at https://canidium.com/contact/ and we will get back to you shortly.
Learn more about the author, Neal Hudson.