If you're thinking about changing your company's sales compensation plan, think carefully before you act. If you switch to a plan that salespeople won't support because they think it's unfair or simply too complicated for them to understand, you could end up with a major problem on your hands. Here's advice from compensation experts and distributors. 

1) Proceed with caution. "I've learned the biggest source for failure is moving too fast," says Mike Emerson, a compensation consultant with Indian River Consulting Group in Melbourne, Fla.

 2) Do your homework. Talk to other distributors and compensation experts. Read magazine articles and books on the topic. But realize there is no one-size-fits-all solution. "I can't underestimate the degree of analysis that went into evaluating our options and coming up with this plan," says Ed Van Dyke, president of Lewis Supply Company in Memphis, Tenn. "I looked at every compensation plan imaginable. A lot of thought went into developing our plan."

 3) Roll out the plan gradually. Don't do a huge restructuring all at once. Gradually start moving sales compensation to the new metrics. A common mistake is when a company changes its compensation plan and the first time salespeople see it is when they get their first bonus check. "Unless a sales rep has seen the metrics they'll be judged on over a period of time, they're going to be skeptical," Emerson says. "It takes them a while to figure out what they need to do to get this certain performance measure or metric to go up. They need to play with those before you start paying on the new metric." 

4) Don't let your plan get stale. When businesses change their focus, they need to re-evaluate their compensation program to make sure it's still in line with their objectives. "I firmly believe you have to re-evaluate your sales compensation package every two to three years," says Van Dyke. "You may need to restructure it to make sure you're achieving your strategic objectives." 

5) Good plans require good managers. "You can't use an incentive plan to manage employees," says Emerson. "Its function is to reward salespeople for achieving management-dictated objectives." Managers must be actively involved not only in establishing the plan, but in implementing the plan once it is in place.

This article originally appeared in the May/June 2000 issue of Progressive Distributor. Copyright 2000.

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