Sales Compensation Blog

1. It's quite possible that Finance has already modeled the impact to sales of either lowering rates (negative) or leaving rates static, but capping comp (less negative) and chosen the lesser of two evils.  
 
 
 
Either way their revenue models, like everyone else's are indicating serious decline and as such warrants a serious effort to keep costs such as comp:sales (or my favorite comp:profit) in line. 
 
 
 
I agree the latter seems draconian, and the problem (from a Finance Dept. PoV) if they were to investigate further would probably be found in the 5-10% of top performers who costs the firm more by eating up more on a per revenue/per profit basis. 
 
 
 
2. Rolling out a change like this, in this millieu, where salespeople were already anticipating decreased sales will probably costs the firm more in lost sales in the long run but the caps are qunatifiable and are here and now staring the finance guys right in the face. 
 
 
 
3. ...if you believe sales comp drives behavior, then you are not going to get any revenue you do not reward for.(/i> 
 
 
 
I know a few marketing professionals who would vehemently disagree with the consequent of this conditional!!! 
 
 
 
Kerek Taylor 
 

I never cease to be amazed by companies that reward sales success by cutting territories, cutting commission rates and generally dis-incentivising a well performing sales force. Why not just get rid of them; they're definately going away anyway. If they're not, they weren't the ones that brought up the issue in the first place.

Commission plans say a lot about the insecurities of management and their own compensation. The sales leadership is never the ones pushing a commission cap. It is always Finance and Operations. When an organization doesn't have compensation plans that win for department leaders, they ultimately ensure that others in the organization are equally bad. It also says a lot about how the organization views sales.