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June 09, 2008
Sales Managers Often in Dark over Comp Plan Changes
Many companies fail to communicate changes regarding their sales compensation plans to front-line sales managers, according to a new survey on sales incentives plans.

The Sales Compensation Practices 2008 survey, conducted by WorldatWork and the National Association of Sales Professionals (NASP) among compensation practitioners and HR managers, gathered information about some of the key elements of sales incentives plans, such as plan design, trends in plan changes and plan communication.

It found that 76 percent of companies revise their sales plans annually "as a matter of course" but that only 58 percent communicate these changes directly to front-line sales managers. Instead, many organizations communicate directly to the sales force (14 percent), take a decentralized approach (13 percent) or do nothing (7 percent).

"Given the importance of the role of the first-line manager in the launch of any new sales initiative, the number of organizations taking time to prepare them, and gain their buy-in, is surprisingly low," said Aaron Bare, CEO of NASP in a press release announcing the survey results. "Sales teams ought to consider partnering with HR to communicate changes in plan design to make sure that such changes are disseminated in a timely and effective manner."

The survey also found that pay mix varied considerably based on sales roles. The most prevalent base/variable pay mix for all sales roles in organizations is 80/20 (as reported by 18 percent of respondents). However, the most prevalent pay mix reported for new account sellers was 50/50 (22 percent). Meanwhile, 19 percent reported a 90/10 mix field applications engineers, and an additional 14 percent reported no pay risk for these workers.

Who is most likely to lead the design process for the sales compensation plan? The top four roles cited by respondents were sales management (42.5 percent), compensation specialists (31 percent), sales operations (10 percent), and HR generalists came in fourth with 5.8 percent.

The survey included 416 respondents, most (54 percent) of whom worked for organizations with 2,500 or more employees.

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