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 budgets today are a significant spend for any firm, and hence gaining optimal ROI out of this spend is a topic of key research. There are many areas in an Incentive Compensation program that contribute to high impact.
Practitioners and incentive plan designers would readily attest to the fact that a well-designed incentive compensation plan forms the bedrock of any successful high impact incentive compensation program.
Hence careful time needs to be spent on designing a plan, and enough time also would need to be planned for presenting the plan to the organization for buy-in and alignment.
There are key guiding principles that need to be kept in mind when designing or evaluating compensation plans. This paper outlines these key guiding principles. This also includes an outline of a robust design process.