Change Management for the Sales Compensation Plan: Turn and Face the Strange


Change can be messy, especially if you're dealing with the way people are paid. Most sales reps will assume a new sales incentive plan means they'll have to work harder for less money. Unless your organization is particularly cruel, this probably isn't true. But between the mess of change and the negative attitudes toward the new plans, too many sales leaders rush the roll out and communication of new sales compensation plans, hoping the whole thing will just go away quickly. It's a terrible strategy.

Managing change requires heavy communication and an understanding of how ready for change your organization is. Most sales leaders probably have a gut feel for how much change their teams can handle, but when preparing for a sales compensation plan roll out it helps to be a little more specific. The following four questions will help you forecast your organization's readiness for the upcoming change.

  1. What is the degree of change for the organization?
    If you're implementing a change to a piece of the sales compensation plan, say changing one performance measure, you may think of that as a minor change. If you're implementing a new go-to-market strategy and the compensation plan change is part of that bigger change, you may think of that as transformational. Give your organization a score from 1 (minor change) to 10 (major transformation).
  2. When was the last time your company changed the sales compensation plan?
    If you change the plan every year or two, you may call that a recent change. On the other end of the scale, the organization may not have changed the plan for ten or more years. Give your organization a score of 1(recently) to 10 (never).
  3. What is the organization's tolerance for change?
    Even if the organization hasn't had a new sales compensation in years, its culture may be dynamic and trusting while it makes changes to adjust to the market. However, your organization may not sit well with change, even if it happens frequently. Give your organization a score of 1 (very high) to 10 (very low).
  4. What is your management team's resolve for change?
    While the sales organization has a tolerance for accepting change, the management team also has a resolve for making change. Test your resolve for when things get tough. Give your team a score of 1 (very high) to 10 (very low).

Your total score will give you a sense of your current environment, the likely near-term forecast for change, and potential actions you might take.

  • 1-10 Smooth Sailing: Use normal modes of communication and management.
  • 11-20 Choppy Seas: Carefully plan, make your message clear, and get regular feedback from the organization.
  • 21-30 Gale Winds: Use multiple communication methods (written communication including emails, explanations, and examples; verbal communications including team meetings and one-on-one meetings between reps and managers; interpersonal methods where reps have chances to ask questions and have them answered quickly) and closely manage the change.
  • 31-40 Potential Storm: Brace for resistance. Communicate strong leadership messages. Closely manage the change and keep the "velvet hammer" handy.
If the forecast is Gale Winds to Potential Storm, a company going through a significant change will probably meet some active resistors who can potentially derail the initiative. However, if the management team is determined to make the change and the company has an executive in place who has created a clear mandate for change, using the velvet hammer can actually smooth the process (the velvet hammer usually refers to exiting a person who is not prepared to change with the organization).

When making the change to your program, start early with socialization, craft the right story for your change environment, and stay sensitive to the organization while you work through your communications process.
Mark Donnolo
ABOUT THE AUTHOR
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Mark Donnolo focuses on helping companies grow profitably by developing and implementing strategies that improve the effectiveness of their customer-facing sales, marketing, and service organizations. Mark's work spans several industries including technology, telecommunications, business services, manufacturing, and financial services.

Mark is founder and Managing Partner of SalesGlobe, a mangement consulting firm focused on sales strategy, sales process innovation, sales team development, and sales compensation. He also directs the SalesGlobe Forum, a membership organization of senior sales executives that operates in partnership with leading business schools.

Mark is the author of "The Innovative Sale" and "What Your CEO Needs to Know About Sales Compensation", available in stores and online at Amazon.com and Barnes&Noble.com.

Mark holds an MBA from the University of North Carolina at Chapel Hill and a BFA from The University of the Arts in Philadelphia.

Mark speaks on sales and marketing topics and has been published in publications that include Fortune, Sales & Marketing Management, Selling Power, Telephony, Investment Property, Telecommunications, Velocity, Workspan, American Way, and Marketing News.

Mark serves on the Board of Trustees of The University of the Arts, founded in 1876 as the Philadelphia Museum and School of Industrial Art, now the country's first visual and performing arts university.

Specialties: Sales Strategy
Sales Organization Design
Sales Team Training
Sales Coaching
Sales Compensation and Quotas
Business Planning and Structure
Venture Capital and Private Equity