The secrets of successful incentive compensation, part 1

Who is eligible for your plan?

Head of IBM ICM UK & Ireland, IBM
Director, Sales Effectiveness and Rewards, Willis Towers Watson

People are complex and multilayered—and so are their motivations. When designing an incentive compensation program that taps into these motivations to encourage positive behavior, taking a one-size-fits-all approach simply doesn’t pay off.

To help you design a successful incentive compensation framework, Ron Burke from Willis Towers Watson and I have defined six essential building blocks. In this post, we’ll kick off this series with the first building block—eligibility. In short: who should be included?

Drawing the line

For some staff, whether they should or shouldn’t be included is immediately obvious. For example, for core frontline sales staff that own customer territories and relationships, the answer is nearly always, “yes.” Equally, for those who work in entirely noncustomer-facing support roles, including clerical and back-office roles, the answer is usually a resounding, “no.”

But for those whose job functions fall between these two camps, where do you draw the line? As sales processes become increasingly complex, navigating this gray area can be complicated. For example, a wide range of technical resources are often involved during the sales process—some contributing prominently, others less so. A common trap is paying incentives simply because someone happens to sit in a particular organizational hierarchy, rather than based on that person’s actual contribution to a specific sale. Make sure you avoid this trap.

Although incentive planning is not an exact science, defining clear eligibility criteria and communicating these criteria effectively to your workforce is vital. Without clear, unambiguous communication about eligibility criteria, you run the risk of causing confusion and dissatisfaction among employees, which can ultimately undermine the success of your entire incentive program.

Setting the rules

With the right technology, you can overcome a complex sales environment to implement and manage a fair and straightforward policy for eligibility. IBM solutions enable you to incorporate specific rules and conditions related to individual roles and how they interact with your incentive compensation framework. The technology allows you to set the rules of engagement for who participates in which deals. Embedding these rules within the system helps you to manage the entire sales crediting process without specialist knowledge of each individual role in the sales process. In other words, IBM solutions automate what is typically a manual process in many systems today.

Check back here for the next installment, which will be about the second building block: how to reward the right employee behaviors. In the meantime, learn more of the secrets of building successful sales compensation frameworks.

Join me at IBM World of Watson, where I will be speaking on the building blocks of SPM.