Implementing your sales compensation plan

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Once you have devised your sales compensation plan (see my article Choosing a sales compensation formula), you need to tackle the more difficult task of putting it into practice. The factors involved in implementing your sales compensation plan include people, timing, analysis of results, and your ability as an organisation to make changes if sales goals are not being met.

Here are four suggestions for making your sales compensation plan help you meet your business goals.

1. Get the timing right

The ideal time to put your plan into practice is at the start of the first quarter of a new year. You need to start the planning process by August if you are to be ready to take action at the beginning of the following January. If you find yourself in the first quarter or later with a sales force not focused on the goal, you’re in trouble.

2. Pull the right team together

A typical sales compensation planning team should consist of a sales manager, someone from the field, a representative from human resources, another representative from finance, and someone from sales administration or operations. The sales leadership should set the parameters up front.

3. Analyse the current plan

Let the team evaluate the current sales compensation plan to see if it is working. All team members should do some analysis. The sales manager should give feedback about how the sales force perceives the plan. Human resources should look at what other companies are doing. Finance can give feedback on the cost of sales and whether sales representatives are paying their way.

The sales operations staff can report on whether the business is rewarding the right people. Are your top revenue generators getting the top pay? You want to make sure that you’re differentiating performance on the part of the sales force so that high performers are earning the high pay.

4. Decide whether you need to make changes

After the results of the analysis are clear, the team should give thought to whether the sales compensation plan needs to be updated in terms of goals, quotas or pay ratios.

Updating the sales compensation plan in mid-stream is common in business today. On average, nearly two-thirds of organisations are changing their sales compensation plans each year. That change may come even more frequently when business cycles change. Business goals when the economy is moving into an upturn are different from when the economy is going through tough times.

My fourth and final article in this series will tell you how to set effective sales goals and performance objectives.

In the meantime, call me on 020 7099 2621 for more advice and information.

About Terry Irwin

About Terry Irwin


Terry Irwin is the founder and CEO of TCii Strategic and Management Consultants. Born and brought up in Wales, he studied Economics and Marketing at university, followed by an MBA.

Before setting up TCii, Terry spent over 20 years in the corporate world with GSK and Henkel, managing consumer goods and services businesses, living in 14 different countries and working in 30 in Europe, North America, Asia and the Russian Federation. He has also served as a UK Director of Carphone Warehouse and as a Non-Executive Director of Holt Lloyd.

Terry has consulted for a wide range of businesses, from multinationals to start-ups and growing organisations. He has a “hands on” approach and stays involved with client projects through to the achievement of agreed results.

His areas of expertise include:


·         FMCG/services/telecoms

·         Business and strategic planning and implementation

·         Business turnaround, outsourcing and cost reduction

·         Acquisitions, mergers and post-acquisition integration

·         International trade and distribution

·         Venture capital

·         Exit strategy

·         Organisational development

·         Succession planning

·         Board-level executive coaching

·         Sourcing key people – both executive and non-executive – for clients.





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