Success factors for a Sales Incentives Plan

Incentives drive behavior. There are two areas in Human Resources where incentives play a fundamental role:  

• Top Executives & Board Members
• Sales Force
  

In the sales environment, the design and communication of sales incentives is key to achieve the business goals. I have experienced mergers and changes in strategy where sales incentives have been fundamental to reach the business objectives. 

The success factors of a sales incentives plan can be summarized in three key points:

1. First of all, a design aligned with the business strategy stresses the need involve business managers to ensure the plans incentivize the right behaviors. It is also important to include finance in the design team as they will bring a pragmatic view on measurement and reporting. The HR lead will play a double role as:
• Compensation Expert,  to ensure a best in class design to influence the desired sales force behavior.
• Design Coordinator, involving all parties so all points of view are taken into account, such as affordability, implementation, etc. 
2. Afterwards, communication plays a key role as the purpose of the program is to incentivize a behavior upfront. The communication process should ensure the whole organization is fully aware of the strategy behind the plans and behavior it pursues. Communication should be clear, simple and made in a timely manner, that is, as soon as the commission period starts.
3. The third success factor is quality of the implementation. These complex projects often suffer from delays and errors, for example, in the reporting process.  The only way of influencing sales rep behavior efficiently is to ensure they have online information of their performance and that they are paid soon and accurately on their results.

These ideas were developed in this article that was published in 2003 in the International Conference for systems, cybernetics and informatics, CISCI (Florida) Sales Incentives Plans within a Total Compensation approach