Posted by www.makanasolutions.com Admin on Tue, Sep 02, 2008 @ 11:03 AM
As you embark on the planning process for next year, it's an excellent idea to make a quick graph of your team's performance versus pay. By making this comparison, you can quickly see if you are getting what you pay for. All too often, sales plans have been designed with so much nuance that you end up paying some people or job roles more than others for the same overall benefit to the company.
In the picture below, we have a scatter graph of people at their annual performance attainment compared to their overall commission payout. You can see that some individuals are receiving $20,000 at 100% while others are getting close to $100,000. Plans that reset quotas and rate ramps too quickly - either quarterly or monthly can create this situation. Reps tend to hold their sales until the next period where they can exceed the goal.
Making the quotas annual will prevent this kind of gaming. Another possibility is that commissions are earned in an earlier period and not paid until a much later event. This scenario causes uneven release of payments and invites reps to live off their prior accomplishments instead of focusing on new business.
In both cases, you end up with a situation where reps can get higher earnings without delivering the results the company really needs.
Another way to look at this graph is to make the x-axis Bookings or Revenue. It can be even more obvious that you are not providing top rewards to your top performers.
If your graph reveals this kind of inequity, you will have a clear area to improve for next year.