Plan Design Workshop
Though there are significant advantages to a substantial, detailed, and methodical incentive compensation design project, the fact remains that with the right people in the room it is possible to design a set of incentive plans in a single day. The “right people” are:
Though there are significant advantages to a substantial, detailed, and methodical incentive compensation design project, the fact remains that with the right people in the room it is possible to design a set of incentive plans in a single day. The “right people” are:
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§ Those who know the sales roles (sales management)
§ Those with the pay and performance data (sales operations, finance, and/or HR) § Those who are responsible for signing off on and owning the final plan designs |
The preparation for a plan design workshop involves many of the elements of a plan design audit or assessment. Before the workshop, we familiarize ourselves with the current plans, the business issues and objectives, and the structure of the sales organization. If possible, we also like to review pay and performance data at a high level and conduct a few brief interviews for background.
The workshop itself is an intensive, highly structured plan design project with the following agenda:
The workshop itself is an intensive, highly structured plan design project with the following agenda:
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1. Introductions and setting objectives for the workshop
2. Incentive Comp 101: Review of key concepts, best practices and terminology, so everyone is speaking the same language 3. Agree on key elements of the company’s incentive compensation philosophy and set objectives and priorities for the new plan (e.g., reward new revenue, emphasize profitable growth, sell integrated solutions) 4. Map/define roles relative to one another for purposes of incentive compensation plan design (hunter vs. farmer, transactional vs. consultative, account responsibility, product responsibility, and sales process responsibility) 5. Set median total target cash compensation for each role 6. Determine salary incentive mix for each role 7. Brainstorm potential performance measures that align with business objectives and roles. These may include volume measures (sales, revenue, or units), strategic/quality measures (new product sales, discount, new customer revenue), and non-financial measures (share of wallet, channel development, marketing initiatives) 8. Agree on appropriate incentive form options for each performance measure (e.g., quota-bonus, step bonus, commission, bounty, modifier, etc.) 9. Select a set of performance measures for each role and the level at which they will be measured (individual vs. team) 10.Apply appropriate weights to each measure 11.Add necessary detail to each performance measure such as timing of sales credit, exclusions, and data sources 12.Set preliminary plan parameters for each measure based upon sales history and forecasts, target incentives, headcount, and performance measure weights 13.Review current Terms & Conditions and decide whether/how they need to be modified 14.Step back and review draft plan designs, ensuring that the assembled group has a consistent and thorough understanding of what has been decided upon 15.Document open issues and agree on steps to resolve them. This will include calculating the aggregate cost of the new plan under different scenarios as well as the impact of the new plan on selected individuals. It may also include confirming that the plan can be implemented objectively (i.e., without self-reported data) and efficiently. 16.Set date and time to review costing analysis and agree on resolution of outstanding issues 17.Build implementation and communication plan and assign responsibility and timing for each step |
It can be a lot to cover in a day but much of the above may have been determined in advance or may not need to be revisited. Nevertheless, a hard-nosed commitment to make decisions quickly, with the minimum discussion necessary, is critical to the success of a plan design workshop.
