Loading ...When I got staffed on my first incentive compensation management system integration project, I knew virtually nothing about that industry. As any good consultant would do, I started to read as much as I could on the topic. One thing I realized is that there are so many books out there talking about how to design plans, formulas, frameworks, etc… But most of these books spend so little time actually discussing how the plan will look like.
That’s probably one of the main reason I come across so many plans that are not completely defined. When I say not “completely define”, I mean that some of its elements are left to interpretation… As a result, the implementers go with that plan, ask countless questions wasting everybody’s time during long meetings, trying to find out who the subject matter expert with a certain piece of knowledge is, only to find out that he or she is on vacation, etc. Alternatively, the consultants could “think” they understand the plan, implement it and later during testing, realize that the results are not those expected by the client… oops! And that often happens around the go-live date and, what-do-you-know, the deadlines are pushed back, the project goes over budget, people are unhappy.
Fortunately, there is one small book called Compensating the Sales Force - A Practical Guide to Designing Winning Sales Compensation Plans by David Cichelli. There is a lot of good info in this book - I will talk about some of it in the future - but in my opinion the best part is only found at the end in Appendix A: Illustrative Sales Compensation Plan. If only all comp plans could look like this!
But that’s not all… The best part of Appendix A is its last few pages; Sales Compensation Plan and Calculation Examples. And THAT’s what I call the most important aspect of a compensation plan (from an implementer’s perspective).
Having a few DETAILED examples in the plan will ensure the implementers knows exactly what the plan does. It will remove any ambiguities, it will save time and be a quick “at a glance” reference. It will also help out in the planning of unit and system tests to cover all scenarios.
A good example will include all the assumptions, sample data/rates/periods/etc and result. If a plan has any exceptions or special calculations, examples for those should be included as well.
That’s it! Please include examples for us :-)
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