CEOs & Sales Comp: Best Practices
Mark Donnolo knows sales incentives. He’s spent the better part of 25 years helping businesses improve sales effectiveness. During all of that time, he promised to never write a sales compensation book. Now he has. We found out why in a recent interview. The book “What Your CEO Needs To Know About Sales Compensation” is due out in January and can be preordered from Amazon or Barnes and Noble.
Mark Donnolo: I swore I’d never write a book on sales compensation because it is an area that has been so thoroughly covered. But I kept seeing a missing piece between the C-levels and the use of incentives.
Xactly: What did that gap look like?
Mark: There was a gap between their knowledge and how to give the right direction. Often a C-level might ask if the plan is going to cost more or less than last year, but that was it. They were missing a big opportunity. Sales compensation is the biggest cost at most companies, but it’s often delegated. We did some analysis on peak involvement at the front end, providing direction on what the plan should emphasis, for example.
Xactly: What does effective direction look like?
Mark: Think about the types of questions they are asking. There are seven major question areas that they should look toward when it comes to plan design. They ask about representation of customer, product, coverage, financial, and talent priorities; motivation of behaviors toward those priorities; results the team expects to see; dependencies in other areas outside of sales compensation, risks to the success of the program; simplifying the plan and message by reducing components; and changes the organization will need to make and the C-level’s role in helping to make that change.
The C-levels that are doing a good job are getting involved in the early stages of finding a strategic direction, testing the proposals, and supporting the change through multiple modes of communication. In fact, according to our research, 55 percent of effective C-levels were asking these kinds of questions.
Xactly: Let’s stop a moment to talk about some of that research. It looks like a lot of work went into this book.
Mark: It did. This project took over a year. We interviewed C-levels in over 60 companies. We also talked to the people who work around them, those who are leading sales, sales operations, or compensation, so that we could triangulate around what we heard.
Our work was heavily interview driven, so that people could really tell us about how the process works and what is important to them. In the book, you’ll see examples from The Weather Channel, Manpower and more. While the companies we interviewed are active in a variety of industries, best practices remain the same.
Xactly: What were some patterns you found?
Mark: More than 65 percent of the best C-levels asked questions around “are we driving the right behaviors?” Another 40 percent asked how the plan aligned with the company’s business strategy. They were also concerned about the ability to recruit and retain top sales people.
Xactly: What do common problems look like?
Mark: C-levels tend to be high IQ people. They are curious. It’s seductive for them to get into the details. But you need to keep them out so they can focus on other portions of the company while sales compensation leaders get into the nitty-gritty.
A good practice is for C-levels to make statements about each of the four priority areas. These give the team a good direction. That way the team can come back and say, “Here’s what the plan does. Here’s what management is going to do that plan doesn’t do.” They can show that the priorities have been considered within the plan or through other actions to improve sales performance. _____________________________________________________________________________________________________ Mark Donnolo is the founder of SalesGlobe, a sales effectiveness services and consulting firm. He has more than 25 years of experience helping companies grow revenue. You can follow him on Twitter @MarkDonnolo. The book “What Your CEO Needs To Know About Sales Compensation” is due out in January and can be preordered from Amazon or Barnes and Noble.