Here are a few key questions from the report that can get you started.
Are we accurately benchmarking compensation for each role?
When you build your compensation plan, you need to benchmark it. This means comparing the role to what others are paying. Conduct research on the industry and your competition. Do your homework upfront to get a baseline for each role. Also, don’t assume that each role is the same when building compensation plans. You should have clear roles and responsibilities identified that may impact each plan.
Do we know what the optimal compensation plan is for each role?
This one can be a tough one to answer. You need to align your budget to what you believe the role should produce. Understand what the attainment expectations and responsibilities are for each role. Then link that to the revenue and cost budget. Don’t assume that each role is the same when building compensation plans. You should have clear roles and responsibilities identified that may impact the plan.
For example, someone that doesn’t carry a quota may only have a salary. If they can’t effect revenue, should they be tied to it? You may also want to pay more for new logo sales. Traditionally, this is harder than selling into your install base. Align your roles to the behavior that you need from each.
Do we have a plan to measure the effectiveness of our compensation plans?
Rolling out a compensation plan with no measurement is a recipe for failure. The easiest way to measure is on payout against attainment. The attainment could be in the form of quota, MBOs or company performance. Make sure that whatever you choose, there is objective data to measure. When you have subjective input, you open yourself up to debate. Sales teams who carry subjective comp plans, traditionally have lower results. Remember to align your plans to measurable company objectives. If you can’t measure it, then don’t pay on it.
What to Do Next
Don’t wait until January 1st to start building compensation plans. Make it part of your annual planning process NOW. Build the plans and have them ready to populate after you close the books. Your team is going to be ready to roll in Q1. Don’t deflate their momentum by not having comp plans ready. If you need additional help download our “How to Make the Number in 2015″ Report.