SAVE | EMAIL | PRINT | MOST POPULAR |  RSS | | REPRINT
|
Are You Being Left in the Dark on Compensation?
June 20, 2008
By Avi Nimmer
Everyone dreams of getting that elusive promotion, making their way up the social hierarchy of the office, right? And if you're really lucky, you may even rise up to be manager—the big man in the workplace who is, at least to some extent, involved in every decision that occurs within the office. Right?
According to a Sales Compensation Practices survey released by The National Association of Sales Professionals (NASP), many managers are more out-of-the-loop than their position title would imply. Of the 416 respondents to the survey, 76% report changing their sales plans annually, while only 58% of those actually confirm reporting the changes directly to the front-line managers.
Regardless of whether companies choose to communicate compensation changes directly to their sales force (14 %), take a decentralized approach (13 %) or even do nothing at all (7 %), the final result is the same: inefficiency.
When business strategy is not directly conveyed to the manager, it "lessens the ability of the manager to lead his team," according to Jim Stoeckmann, a WorldatWork practice leader focused on sales compensation and an executive of the survey. "The ability of the manager to help with goal setting and planning for success is undermined, and the role [of the manager becomes] underutilized."
Further difficulties in effective management can arise from common pay mixes and performance measures, as well. Many employees working in positions which need be highly motivated to succeed, such as new account sellers, report having base/variable pay mixes as high as 50/50. These aggressive pay mixes can be an effective means of inspiring employees to be highly motivated to succeed, but as Stoeckmann points out, "some companies don't use variable pay because they don't want to have just one part of the organization being the entire sales force."
And, even when employees are inspired to succeed because of variable pay, success can be limited. According to the survey, most companies use three or fewer performance measures to evaluate employee performance. While this focuses attention on the most important indicators of success, such as total revenue generated or number of sales executed, it can blind employees to other important but less tangible marks of success, such as customer satisfaction and loyalty.
For a manager trying to achieve the greatest overall growth of the company, these measurement induced blinders can be frustrating and counter-productive. "There is an art to balancing the number of measures used in evaluation," says Stoeckmann. While he acknowledges that using only three measurements can be limiting, "beyond three measures, the percentage of variable pay linked with each element dwindles, which may diffuse focus and incentive."
The survey demonstrates that aggressive pay mixes and key measurements used can be an inspiring way to motivate any team, but it has to be done right. And the most important factor of just such a successful compensation is the composition of the design team.
"A cross functional design team made up of the right stake holders is needed, with diverse viewpoints being heard and brought to the table," says Stoeckmann. If a company devises a strong plan for success, drawing from the expertise of the manager and a diverse group of opinions, a company can "gain the confidence that the game can be played and played to win," he says.
|
SAVE | EMAIL | PRINT | MOST POPULAR | RSS |
|
|
| Back to Management Index |
|
|
