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May 08, 2010
Profitability-Oriented Sales Compensation Plans Link Pay to Overall Results

In a BLR webinar entitled "Sales Compensation Strategies: How to Motivate and Re-Energize Your Sales Staff in a Challenging Economy," Dan Kleinman, principal of Dan Kleinman Consulting, a compensation and human resource consulting firm, explained that successful profitability-oriented compensation plans link pay to overall corporate results more than individual success. However:

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  • Sales has no control over determining profit.
  • Discount and margin rates are all set by the executives.
  • Rainmakers will walk.

And although there are line-of-sight challenges, there is great impact in:

  • Aligning the sales force with overall company strategies
  • Furthering sales staff understanding of the financial implication of sales
  • Linking pay to the funding pool; achieving rewards trough the incremental gain

It is important to put precision in perspective. Set a standard based on a modeled estimate. And trust your staff to be smart!

Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. For the past 18 years, he has served as an independent consultant for a broad spectrum of regional, national, and international companies, providing compensation, performance, organizational planning, and reward-system design services. He may be reached at info@dankleinmanconsulting.com

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