Incentive Plan Communication

An often overlooked fact is that an imperfect plan that is well communicated is more effective than a perfect plan poorly communicated.  If participants don’t understand how the plan works and how it links to their roles and the company’s objectives, motivational impact is seriously undermined.

The main elements of our incentive plan communication offering are:

1.    Developing a communication plan.  A communication plan specifies the communication objectives, the key messages for each audience, a series of cascading communication events (which can be abbreviated or extensive), the media for delivery of the messages (I.e., voicemail, webinar, teleconference, stand-up presentation, workshop, one-on-ones), and the timing and accountability for implementing the communication plan.

2.    Plan documents.  Every incentive plan needs a polished, clear, and concise plan document.  There are a variety of plan document formats and none is appropriate for every organization.  Sometimes a brief 2-3 page document will suffice, but more detail is often helpful or required.  We work with clients to develop clear and impactful plan documents that meet the needs of their organizations.

Most plan documents should include:

§  A statement of the overall plan objectives, linking the plan to strategy and generating enthusiasm

§  A summary of plan measures and weights

§  Detailed descriptions of performance measures and mechanics, clearly explaining how incentive pay is calculated

§  Calculation examples

§  Terms and conditions governing the plan (to be reviewed by Legal and generally included at the end of the document or as an addendum)

§  There may also be an individualized attachment detailing pay levels, quotas, and account assignments, as well as an acknowledgement form to be signed by the participant

3.    Communication presentations.  A primary vehicle for plan communication is the presentation.  We first develop an overall presentation, which is then modified to serve at different events such as: 

§  A meeting with the head of sales and the sales managers to secure their understanding and buy in, so they can explain and support the plan to their teams

§  A presentation to “launch” the plan at a meeting of the entire sales force

§  Smaller team meetings involving separate parts of the organization

Critical elements of a communication presentation include:

§  Why the plan is changing

§  How the plan new plan differs from the old plan

§  The process and people involved in developing the new plan

§  How the plan links to strategic objectives

§  Elements of the new plan—how it works

§  How to earn money under the new plan

The communication presentation is usually not as detailed as the plan document, but parts may go into significant detail, particularly if there are changes that may be difficult to comprehend.

We work with clients to develop polished communication presentations that build trust and enthusiasm for the new plan.

4.    Incentive calculators.  Nothing explains the mechanics of a new incentive plan as clearly and immediately as an incentive calculator:  This is an Excel or web-based tool that sales people can use to calculate their earnings under actual or hypothetical sales performance scenarios.  It can also serve as a useful management tool to motivate sales people. 

Incentive calculators are particularly useful when plan mechanics have a degree of complexity that makes calculating incentives in one’s head or with a calculator difficult or impossible.  This is usually the case with goal-based plans, and particularly those where performance is calculated on a year-to-date basis.

While incentive calculators are not sales compensation administration software, some clients find that they are a cost-effective tool to calculate actual incentives, particularly if the number of incumbents is small.

Because of our familiarity with the standard formulas that are used for incentive calculation, we are able to develop calculators more efficiently than they can be done in house.