Every couple of months, we get a call from a member who’s in the sticky situation of needing to make mid-quarter adjustments to quotas or compensation plans. There’s a variety of reasons why companies land in these situations. Sometimes a new product launch isn’t as well received by customers as hoped. In other cases, the sales force lands upon an unanticipated spike in customer demand. And sometimes an average performer unexpectedly becomes a superstar.
But regardless of the causes, goals and pay plans that are out of sync with rep performance can create big problems. If adjustments aren’t made, someone’s bank account will be broken – either the rep’s or the company’s. The adjustments may be messy, but the alternative is far worse.
But contrary to common belief, quota and comp plan adjustment don’t always have to be jarring. We’ve seen a number of companies navigate the process with minimal disruption. The key, they tell us, is to always focus on communicating two things to the sales force:
1.) That the company is committed to rewarding above-average performance
2.) That the company is committed to maintaining plan fairness (e.g. ensuring that everyone’s quotas are set and revised using the same, standardized process).
Reps care about how much they get paid, but the nuts and bolts of the pay plan are not nearly as important to them as many sales leaders think. In fact, when we tested the drivers of rep engagement and retention, comp plan design doesn’t even crack the top twenty. Pay fairness, on the other hand, does.
Reps need strong, ongoing reassurance that everyone is held up against the same standards – and that when adjustments happen, they impact everybody equally.
So how do you communicate this? Our research finds that these types of messages are far better received if given in one-on-one conversations between managers and their direct reports. This is not something you’ll want to address with a mass email or in sales meeting.
How have you communicated quota or comp plan adjustments to your organization? Is it your experience that one-on-one conversations work best?