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A manufacturer of high quality engineered tools with approximately 200 employees

The Situation

The company has experienced high turnover in its sales/marketing management positions. The company felt that it may not be paying the appropriate compensation levels for its sales positions vis-á-vis the external competitive market, as well as to review its sales compensation plan designs to address the acquisition of new business and the organic growth of existing business. There were no sales total compensation targets and the manner in which quotas were established created significant compensation variances for positions that had the same selling roll.

The Deliverables

  • Assessed the strengths and limitations of the sales compensation program based on the inventory and analysis of the current program, as well as the feedback from the interviews and external benchmark data.
  • Provided current trends and best practices in sales compensation program design. Developed model of key success determinants for the sales incentive plan design and communications and performed a gap analysis between current and desired programs.
  • Prepared recommendations to increase the value of the sales incentive plans including: type of plan design; incentive targets; degree of leverage; mix; performance measures and range of award opportunities; weighting of sales performance components; payout formulas and mechanics; timing of payouts; etc. A cost/sensitivity analysis was also provided that compared the current plan designs with the proposed plan designs.
  • Prepared an implementation and communications program approach and communication materials to announce changes to the sales team.

The Results Achieved

  • Incentive plans were redesigned to payout only after reaching a minimum sales goal or quota.
  • Target sales incentives were established for each sales role based on appropriate pay mix.
  • Quotas were established based on a new methodology.
  • Sales quotations process was developed to eliminate some unnecessary steps and to increase its effectiveness and efficiency.