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What Your CEO Needs to Know About Sales Compensation

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What Your CEO Needs to Know About Sales Compensation

Connecting the Corner Office to the Front Line

AMACOM,

15 min read
10 take-aways
Audio & text

What's inside?

The right sales compensation plan produces the right volume of sales.

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Editorial Rating

7

Qualities

  • Applicable

Recommendation

Designing and implementing a compensation plan for your sales reps can be tricky. Handle sales remuneration right, and dozens of reps can earn big money selling your products and services in volume; handle it wrong, and you reward poor sales performers while driving top salespeople out of the company. A fine line separates these two dramatically different outcomes. Sales effectiveness consultant Mark Donnolo offers the best practices in sales compensation planning and program implementation. His explanations are detailed and thorough, though those who seek a straight, linear sales management compensation game plan may find his descriptions occasionally convoluted. getAbstract recommends this informative book to all CEOs and sales executives whose success depends on motivating their salespeople.

Summary

Compensate Your Salespeople Appropriately

The success of a sales organization depends on its sales compensation plan. Such a plan, which constitutes a major cost-of-doing-business expense, proves a more potent motivating factor than sales training, sales strategies, sales management or exhortations from the CEO. Developing the right compensation plan is an art and a science. Companies must find the perfect balance.

When it comes to defining the best design and implementation of sales compensation plans, experts disagree. Corporate departments, such as human resources, finance and sales, often conflict about what sort of plan the company should adopt. Typical questions include whether the plan motivates salespeople, increases performance, supports strategy, rewards the right people, costs too much, sets appropriate quotas, or is easy to administer. Firms sometimes compromise on these issues to placate discordant parties. This leads to compensation plans that don’t work.

Many businesses erroneously look at commissions to decide where to save money or alter sales behavior. Compensation should never determine strategy; strategy should set compensation. Consider where...

About the Author

Mark Donnolo, managing partner of the consulting firm SalesGlobe, founded SalesGlobe Forum, a sales leadership community.

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