In each episode, competitors quiver as Ramsay shouts orders and spews obscenities and blunt criticisms at them. When they’re given more tasks and criticism than they can handle, some contestants buckle under the pressure and lose their cool. This tension got me thinking about the ways people deal with pressure and, more to the point, how to avoid the frustration that results from trying to juggle too many balls, especially in business.
In the same way that a chef can lose focus when preparing many dishes at one time, sales reps can get distracted and become frustrated when dealing with too many performance measurements. Less means more when it comes to gauging your teams’ performance, and more and more organizations are realizing this. In fact, back in 2010 Compensation Force blogged about a survey conducted by WorldatWork, which found that a majority of responding organizations (75%) use three or fewer performance measures in their individual sales compensation plans.
To determine the number of sales incentive measures that are optimal for your organization, consider the following three best practices:
1. Prioritize and Simplify
In the mid-90s, IBM execs had a name for their compensation woes: “incentive plan obesity.” They threw money at every problem, hoping to solve their ‘weighty’ issues. At one point, IBM sales reps juggled 20 different performance measures. Their managers might as well have said, “Hey guys, we don’t know what we’re doing! Just sell anything!”
When an organization loses control of its incentive strategy, frustration and lack of focus are sure to result. As a general rule, the larger your organization, the more products you have, and the more complex your sales compensation plan. Many things factor into the incentive equation — discounts, product bundles, and divvying up commissions/SPIFFs fairly, to name a few. You can streamline the process when everything rolls up under only a few performance metrics. They’re the mechanics that guide your compensation plans, and drive how individuals sell by rewarding desired behavior (focus on new product sales, upsells, margin optimization, quota attainment, etc.) A word to the wise: Look to simplify everything by tracking the calculations in one consolidated database.
2. Drive Behavior with Accuracy and Objectivity
Once you simplify, focus on accuracy and objectivity. A compensation plan that relies on information from Excel spreadsheets riddled with human error is inaccurate and subjective. Unreliable spreadsheets cause reps to doubt calculation and question commission checks. Some might even begin shadow accounting.
To motivate desired sales behaviors and outcomes through a simplified compensation plan, your measures must be objective. That’s where data gathered through an automated solution is key. It’s comprehensive, accurate and allows your reps to view their precise performance results in real-time.
3. Boost Productivity with Immediate Feedback
A sales leader’s job is to inspire his team, build confidence, increase productivity and provide timely feedback. A lack of immediate feedback can send the subtle — and very wrong — message that the team isn’t highly valued. Through automated compensation technology, you can ‘fire up’ your reps while at the same time offering transparency to the sales process by instantly showing them the rewards earned from closing deals.
The best leaders don’t just behave in ways that dictate how their teams should behave; they also invest in tools that boost efficiency and help reps perform like rock stars.
Sales compensation management is totally feasible without having to go Ramsay on your reps. To learn more about about performance measures, check out our commission management packages.
—Erik Charles is Xactly’s Principal Incentives Strategist.Image by ollyy/Shutterstock.com