Developing and Navigating Commission Plan Changes

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It’s understandable that companies will need to evaluate their overall compensation models to include commission plans in order to keep it relevant. Commission schemes should be positioned to drive the behaviors and accomplish the business objectives the company needs, while also being attractive to the market to get the best talent in the door.

That being said, changing a commission payout plan can be a slippery slope, and when not handled properly, can slip your sales teams right out the door. Pay is a sensitive topic, and typically the moment a change in it is announced, the majority of your staff is updating their résumés and finding the time to talk to that recruiter from another company who has been messaging them for the last year.

Often, companies make the mistake of assuming that the negative impact to earnings is only a losing situation and therefore just roll it out and brace themselves for the backlash. Yes, there will be backlash, but that’s often the initial reaction to hearing of the change. Think about when a customer has an initial reaction to a price quote  —aka “sticker shock” — and then you discuss and talk through the benefits and the returns and all works out in the end. Give your employees the benefit of the doubt. A lot of them are there to be a part of company growth — they just need to be heard and considered and understand the bigger picture.

Change management and communication is crucial here and I have outlined some steps to help navigate through this very bumpy landscape based on my own experiences, both positive and negative:

Be clear on the reason to change commissions. There needs to be a business driver behind it, to create disruption and distraction without being clear as to the why is just unnecessarily putting your business at risk. Do you need to achieve a healthier payout percentage? Is it not competitive with the market and therefore causing you to lose hires at offer stage? Does it not support new sales strategies you need to introduce to accomplish company objectives? Maybe it’s just a tough economic time like we are in today and the company needs to do this to survive. This reason will be at the very root of your decision and your communication plan.

Establish a committee. Select not just management but some of your key sales team members. Explain to them the reasons for the coming change and ask for their ideas on how they would change it to create that balance between what the business needs and what the teams need to stay motivated. These don’t always need to be top performers but certainly a least a representative from that group. Don’t be afraid of your squeakiest wheels here, if you can explain to them the reason for the decision and involve them in the process of establishing a new structure their noise will work in your favor when rolling this out. Read more here…

Source: The Staffing Stream