Incentive Compensation is one the most important drivers for sales force productivity and effectiveness. Sales teams today continue to form a significant driver of a firm’s topline, and hence having an engaged sales force is critical for corporate success. Compensation is a significant line item in any firm’s budget, so achieving optimal return on this investment is a topic of keen interest. There are many areas in an Incentive Compensation program that contribute to high impact.
Incentive compensation experts will readily attest to the fact that a well-designed incentive plan forms the bedrock of any successful high impact incentive compensation program. Hence careful time needs to be spent on designing a plan, presenting the plan to the organization, and building buy-in and alignment. There are key guiding principles for designing and evaluating compensation plans. This paper outlines these key guiding principles and presents a robust design process.