What to do After the Compensation Plans are Done

by Ellen Miller

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Once the plan design is finished and the start of the fiscal year has come and gone, you can either get the rest of your job(s) done, or you can complete the following tasks to ensure the success of your sales or company incentive plans throughout the year.

1. Plan Population
   By this time, employees have been assigned to plans so it should be a relatively easy task to run report(s) of how many employees have been assigned to each plan. This can be most useful as a “housecleaning” task – purging unused or under-utilized plans. Plans that have no employees assigned to them can be deleted or suspended, reducing the number of plans that are administered or reported on. Plans that only have one or just a few employees can be flagged for current or future discussion with management about the absolute need for these plans. An audit can also be completed to ensure that the employees on each plan have the correct title for that plan – individual contributors should not be on the management plan, and systems engineers should not be on the account manager plan, and so on.
   
   
2. Quota or Target Attainment
   This is probably one of the most valuable tasks that can be completed once the plans have been implemented. Not only does it directly measure the effectiveness of quota or (company revenue) target setting, but when one organizational layer in a sales organization is compared to another layer (such as account managers to their management), you can determine the distribution of quotas throughout the organization. This can be done on a semi-annual or quarterly basis with results reported to senior management.
   
   
3. Commission or Incentive Plan Payout
   Whether you are paying your plans out on a commission/human resources system or on excel spreadsheets, reports or charts can be periodically generated to determine where you are actually paying relative to the target incentive amounts that you budgeted for during the planning phase. This can be helpful in several ways – measuring actual-to-budget, reviewing performance distribution, and tracking actual incentive and total compensation payouts for participation in compensation market surveys.
   
   
4. Bonus Payout
   In addition to looking at the attainment and payouts relative to purely financial measures, it can be an invaluable exercise to evaluate the performance and payouts for other plan features such as management by objectives (MBOs), customer satisfaction, and so on. Management often question the value of these types of bonuses in driving critical business initiatives and inclusion in the plans, and this can aid in assessing that. It can also determine whether performance and payouts are being distributed effectively, such that there is a wide dispersion between higher, average and lower performers on these measures.

Please contact us if you would like to talk about ensuring the success of your incentive plans.

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