HomeBlog Takeaways from Chief Sales Officer (CSO) Roundtable on How to Design Winning Compensation Plans

Takeaways from Chief Sales Officer (CSO) Roundtable on How to Design Winning Compensation Plans

October 20, 2016|Phil Harrell

  • Well-designed compensation plans are critical to a sales team’s success
  • Given an organization’s competing priorities, it is challenging for sales leaders to implement a simple, effective compensation plan that motivates the right behaviors
  • Sales leaders should follow a comprehensive compensation process to design winning compensation plans

One of the benefits of being a SiriusDecisions client is taking advantage of the numerous peer interaction opportunities available at our events, breakfasts and roundtables. These events provide a platform for busy b-to-b sales executives to share and learn from each other and build a professional network of sales leaders.

I recently facilitated a chief sales officer (CSO) roundtable in the Boston area to discuss key challenges around compensation and share ideas about how to design winning compensation plans. Here are four key takeaways from event.

  • CSOs face a huge challenge keeping their sales compensation plans simple. How do sales leaders incentivize the right behaviors without negatively affecting other areas? What is the balance between new business and organic growth (hunter vs. farmer)? How should a sales leader compensate product revenue vs. services revenue? These are the types of questions that came up during the discussion, and it is clear that sales leaders need a process to engage stakeholders to prioritize key company priorities.
  • CSOs must balance how much to pay up-front for getting new business vs. paying for long-term revenue. How should a sales leader pay account managers and “hunters” to manage and grow existing customers? Who on the team should be paid for long-term revenue?
  • CSOs struggle to figure out how to change their compensation plans without having major negative impacts on existing business. Even though several sales leaders commented that they’d outgrown their current compensation plan, they also indicated that they were very afraid of disrupting business momentum. How could they make changes to their compensation plans to fix known deficiencies without having unintended, negative consequences?
  • CSOs want to understand the optimal pay frequency and the right ramp-up strategy for new hires. How long should they pay new hires for getting up to speed?

Most CSOs lack a structured compensation design process to develop a simple, effective plan. CSOs typically go through a frustratingly long, complicated and disorganized process that often fails to include the right stakeholders and that doesn’t start with corporate goals and objectives in mind.

We recommend that our clients take a comprehensive view of compensation redesign and follow a 14-step process that we shared with the group to help address the issues raised above. This process will ensure that the compensation plan is aligned with company goals, motivates the right behaviors and helps sales leaders prioritize/make the right trade-offs.

Phil Harrell

Phil is an industry thought leader in sales and marketing with more than 20 years of experience building and leading high-performance b-to-b sales teams worldwide. He has held executive-level sales and marketing positions at well-established companies and hypergrowth technology start-ups, and has proven success in growing revenue in the hundreds of millions.
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