The past year has flown by, and 2016 will be here soon. While the fiscal year won’t be over for some time, you’re probably starting to consider next year’s compensation plan for sales teams. As you do so, it’s important to keep current trends in compensation in mind. While sales incentive programs generally don’t change radically from year to year, there are many small tweaks you can make to ensure your sales team hits quota consistently.
The U.S. economy recovered substantially during 2015, and that fiscal momentum means 2016 may be an even bigger year for the nation’s economic performance. Make sure your organization can reap the benefits by creating the best incentive plan possible.
Here are some trends to watch for in the new year:
An expanding workforce
According to data from the Alexander Group, a consulting firm, the majority of sales organizations boosted their headcount in 2015. Those expansion efforts are largely the result of improved economic conditions that have enhanced consumers’ buying power and boosted production from manufacturers. In nearly every business, sales are up and the economic picture is improving. These factors make further expansion in the near future likely.
“An improving economy encourages expansion.”
As a result, organizations will need to create improved compensation plans that accommodate people at every level of tenure within the organization. This can be difficult using older systems that are based around a single spreadsheet. As a result, companies may want to invest in an updated compensation management platform that makes it easy to manage complex incentive structures that incorporate several different metrics.
More ways to compensate
Employers have traditionally awarded employees’ compensation bonuses based on sales alone, but that approach is falling out of favor. Today’s compensation plans incorporate more elements of an individual’s performance into their eventual pay.
This manifests in a variety of ways, and can extend to departments outside of sales. Manufacturing teams are rewarding employees who make substantial contributions to the company’s overall safety record and managers may be better rewarded for overall team performance with additional bonuses. Within the sales force, the use of compensation has become smarter but also more complex. Companies now use incentives to reward sales employees for accurately forecasting their eventual sales. This has huge benefits when company’s estimate their annual performance, and ensures employees have reachable sales goals.
The need to control costs
The Alexander Group found many sales groups came in above or below budget as a result of paying out more or less than anticipated in incentives. This reflects the difficulty involved in accurately anticipating sales performance. To combat this issue, companies can integrate more advanced compensation tracking and management software that allows them to collect and analyze historical data on employee sales.
This will both provide greater insight into how individual employees work and help a company better distribute the workload across a sales force. Once these programs are implemented, sales people will have a better understanding of their standing relative to team sales goals.
