7 reasons for a new variable pay model sales

Posted by Abdullah Abdul Aziz | Sunday, May 15, 2011

Traditional variable compensation schemes increasingly successful, the employee within the meaning of the company in significant and sustainable goals and align them to motivate a committed performance. Even cosmetic procedures for the existing compensation model does not usually lead to success. There are many indications of a radical change to a new compensation system.

How modern traditional sales compensation?

Traditional compensation systems are usually focused almost exclusively on a performance criterion (eg, sales or gross margin) and ignoring other important aspects (income and expenses, product objectives and customer, etc..) For They are usually boring, as it has for the performance of the employee base of income distribution variable in terms of efficiency. Additional services are worth little. Besides that equities tend to be too low to be motivating or are too high and therefore inadmissible for a labor law perspective.

In addition, classic pay based on performance is concentrated in sales only in the field and possibly the office staff, while the modern remuneration in the areas of personnel for many integrated (product management, services call center, purchasing, logistics, etc..) traditional compensation systems usually have no preference for equipment: You pay only the performance of individuals. The networks are not carried out.

They are often reimbursed by chance that the actual performance of employees: large field potentials, large customers, large orders often lead to unwanted, etc (and unjust) "explosion of income. " Moreover, conventional payment systems usually can not be new responsibilities in sales and establish new market demands without changing the treaties. They are so inflexible.

Paid by commissions usually have. Would be correct, the payment of bonuses, which focus on the "fog of good performance."

What expectations should be directed to a modern compensation system sales?

  1. Easier and better achievement of corporate and marketing objectives: they marry modern payment systems, employees and equipment in differentiated targets, such as such as short-term sales and profit contribution, but also long term, such as the promotion of strategic customers and products. Self-control and responsibility of employees to improve, and that his authority in making decisions.
  2.  High commitment of the employees of more and better services: a model works well designed variable pay compensation curves with the clouds. This means that the employee may suddenly increase their income with very good performance up to 30%. This is to increase revenue, but is not guaranteed permanent income, and the next year, new performance targets set.
  3. The yield on the company's situation improves. The companies have to pay their employees focused and generating demonstrable results better. The reasons for this are clear definitions of the objectives of better management and control of personnel increased incentives for superior performance in a greater identification with the marketing objectives in a better focus on revenue and cost items, and review components of strategic power. Experience has shown that the conversion pays for a new compensation system in a few months.
  4. The orientation distribution team is established by the compensation system. Through the services of personnel from various divisions in the compensation system (offices, services, product management, development, etc), many people gather. Business interests against departmental interests. A goal-oriented collaboration is encouraged.
  5. Fast and flexible adaptation to market changes: well-designed variable compensation plans are designed to allow contracts of part of trust with employees and works one can conclude that the compensation scheme, but on the contrary, the content is always adapted to the tasks and objectives can present. This will ensure that more real interests of the Company are paid and not those who were present yesterday.
  6. he management of crisis situations improved. If, as many employees of the company are included in variable compensation plans, the cost increases flexibility in the company. This is a significant decrease in average personnel costs in times of crisis and thus a better conditioning of the company. In the phases of prosperity and may increase staff costs and have to hold up well.
  7. Attracting qualified new employees, which was to be gained from overseas is increasing. Making employees feel an attractive remuneration system energized by the performance pay.

Well-designed compensation plans to help create competitive advantages and exploit the market potential. Join the folks over at the right targets and develop a high performance culture. They are also attractive to good employees - even those who still have not earned the job market.