Compensation Plans Really Matter!
One of the most important discussions we can have with employees is about how we value them, and in turn compensate them, for their contributions to the success of the company. Purpose-built companies should plan to engage employees in these discussions on an ongoing basis. I’ve had a couple of decades to figure out what makes a great compensation plan for and how to engage sales teams, and I want to share those lessons with you.
Engaging your employees about their compensation is critical for driving alignment between the value of their contributions and the compensation tools and amounts available to you.
Mission-Driven and Compensation-Compelled
Top-performing sales teams are equal parts mission-driven and compensation-compelled. Assuming your company has an awesome mission and a purpose-driven team, here are some tips for approaching your compensation plan.
- Define clear objectives for the quarter and the year that align with the company’s vision. Rally the team to deliver those numbers.
- Plan to hire and build out the organization in a way that supports delivering those numbers.
- Create and share clear accountability plans for all sales team members. Move fast to replace anyone who rejects accountability.
- Reward success along the way!
Defining Your Objectives
The first step to a solid compensation plan is defining your goals for your team. Think about how these goals tie into your company’s larger strategic objectives, and engage your team for help refining them (and the figuring out strategies for reaching them).
It’s a good idea to walk through the compensation plan with your team, drawing a clear line between the goals, the strategy, and the reward for achievement. If your team is fired up by the compensation plan, you have alignment. If not, you need to start again. Getting their buy-in is critical to the overall success of the company.
Once you have alignment, break the objectives into achievable quarterly goals. These serve as signals that the team is making meaningful progress towards the larger company goals, and they help you maintain momentum and excitement.
Building a Killer Sales Team
There’s a lot to say on this topic, obviously, but start by designing the org chart for the year ahead and asking yourself if you have “A” players in critical roles. Is there existing talent on the team you need to promote or upgrade? Move people off the team ASAP if they do not help you achieve the objectives set by the company.
Do your hiring plans and processes generate the talent pool you need? (Revisit the book Who for more guidance there.) As you scale your company, everyone on the sales team must be able to deliver 2x productivity—you will always be behind the hiring curve and your needs will outstrip your team size. Make time on your calendar each week to prioritize hiring, staffing and contractors. As I have been told many times over the years by all of my best bosses, if I don’t make building my team a priority, no one will.
Fill out your org chart with a sense of urgency, but don’t make a rushed decision. Look at your current team and write down each member’s strengths and weaknesses. Make sure the people you hire augment the team with their strengths. Take ownership of your hiring process and success will follow.
Creating Action and Accountability Plans
Build 90-day coaching plans for each team member to ensure alignment with the company’s objectives. Invest in coaching time. Document the coaching and have the employee repeat back to you what you discussed and what they need to work on.
Invest in travel time together. If you don’t go out on calls and engage with the employee, how can you ever understand what is working and what is not? Travel time will help build trust between your employee and you and will allow you to create an environment where the employee will be receptive to coaching.
Review with each team member the consequences of achieving or not achieving the company’s quarterly objectives. Put the objectives in writing and have the employee sign off. Make sure your compensation plan is clearly tied to these quarterly objectives.
Ask each team member to write down their quarterly goals and action plan and share it with you. Tie that plan to the compensation plan to drive team alignment. Engaging your team in the planning process and making sure they have a deep understanding of your goals will help you drive success.
Reward success along the way!
Document clearly how the employee will be paid for the results they achieve, and put small incentives in place that are fun and rewarding. Discuss compensation goals as part of your regular 1x1s with team members, and make sure to give frequent feedback on what’s working and what needs attention. If you understand what motivates a person and build connections to those motivations, you will be supporting their sales happiness! Well-built comp plans get feet out of bed every morning and sales leaders to solve customer problems and create wins for your company.
Team-Building and Comp Plan Resources
Topgrading, Third Edition by Bradford D. Smart, Ph.D.
Who by Geoff Smart and Randy Street
Coaching Salespeople into Sales Champions: A Tactical Playbook for Managers and Executives by Keith Rosen
