A company takes a great step toward success when it decides to implement an incentive compensation management plan. ICM plans motivate business professionals to sell more products, improve behavior and focus on increasing revenues. These programs have proven time and again to bring out the best in any company, which is why they are so popular among all sorts of organizations, particularly those that are sales-driven.
If a company has decided to revise or begin an ICM plan, it’s important to tailor it so that objectives are being addressed through incentive planning, as well as gain insight into how the pros have designed the right plan. Keep reading to find five tips on how to design the right incentive compensation plan.
1. Create a plan that aligns with company goals
Before setting out to put a plan in place, consider the goals of the company. A common mission of any sales-based company is to bring in higher revenues and increase employee retention. Map out a way to motivate employees to help a business achieve these goals.
For example, a company can financially incentivize staff for not only increased sales, but also for proven quarterly client retention. This will encourage workers to focus on customer service as well as driving sales. It also rewards a wider array of employees – some have a special knack for keeping customers happy, and shouldn’t be ignored just because they aren’t the top salesperson at the company.
2. Conduct business analytics
Having accurate numbers on sales and performance behavior is a huge benefit for a company. Rather than relying on spreadsheets that are prone to error and take up precious time to fill out each day, a company can use business analytics software to carry out the process.
These software products delve through countless lines of raw data that have been gathered over months or years, and carries out an in-depth analysis. When the analysis has been completed, a VP of sales and other company decision-makers will be able to see individual performances, quarterly company progress and industry trends, presented in easy-to-understand graphs and charts. Visual representations of company performance will help an executive decide where to focus in building reputation and skills.
These results will also point to star workers who may be able to transition into leadership roles, as well as those who may need more guidance to improve sales.
3. Focus on both long- and short-term goals
Aligning sales goals with company objectives is important for long-term goals, but in order to get to an ideal place where team members are consistently working within these parameters, it’s essential to focus on short-term achievements as well.
Rather than only implementing incentive compensation rewards for meeting sales goals, try instating regular monthly or weekly competitions to keep employees working hard each and every day. Don’t overwhelm staff with constant competitions, which can lead to burnout or animosity among colleagues, but evenly-spaced, regular sales events will encourage top performance across the board.
4. Communicate
When kicking off a new plan, it’s important for supervisors to explain to workers exactly what will be happening to their compensation program. A VP of sales should hold a company-wide meeting with workers to clearly run through changes, and invite questions and comments from attendees.
No matter how brilliant the plan, some people are bound to resist the changes – it’s important to keep the lines of communication open so staff will feel they are being heard.
5. Monitor the plan
Once a plan has been put in place, it’s vital to keep a watchful eye on progress being made. Use incentive compensation software to track employee performance and to see how the ICM plan is improving company performance. It may be wise to tweak the plan periodically to bring out the best results.
