Sales Compensation Blog

Over the last few weeks, we've been having a great internal debate about certain comp plan elements we've been running into. Our debate centers on what is the ‘best practice', and as usual, it depends on the goal. It seems many of the unusual "tweaks" happen when sales and finance are trying to balance motivation of the sales team (sales) with conservation of cash (finance).

Let me be clear about Makana's position on best practices - we believe the plans need to motivate the individuals to execute the tactics that support the company strategy. Companies go through stages. Sometimes the focus is growth. Sometimes the focus is cash. Often it can be both.

No matter the stage of your organization, communication of the strategy is paramount and the incentive plans communicate the most. They simply are the most powerful lever you have to drive strategy and get the sales performance you want.

We've learned, in our years of consulting on incentive compensation plans, the conversation about how your incentive compensation plans will drive strategy typically requires facilitation - especially between these two groups: sales and finance. Since most plan documents are so convoluted and there is no common way to visualize the ‘system of incentives' being designed, each group tends to adapt a position based on a core belief rather than the strategy. Most finance executives want to hold commission payments until cash is collected. Most sales executives want to pay commissions at bookings. Many of the ‘tweaks' add nuances at both events that make it hard to calculate and report adding cost and reducing motivation thereby not satisfying either.

We have developed our alignment view specifically to facilitate the conversation so you should have to truly align your plans with strategy. We hope you enjoy the conversation.