Sales Compensation Leading Practices

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Sales compensation focuses on a sales representative’s individual goals and performance. Using sales commission as part of a compensation plan allows for different configurations based on the given solution.

An effective sales compensation process is built on a set of well-defined and clearly stated business objectives. Key objectives articulate the ideal performance results that the company expects from that process. When determining what process improvements are needed to reach the next level of maturity, evaluators should consider the importance of the process being addressed. As the importance of a process increases, its desired capability increases.

This tool features several leading practices for the sales compensation process, including:

  • Policies and procedures are documented and followed, and duties are adequately segregated.
  • Changes to base and variable compensation plans are introduced in a smooth, progressive manner.
  • Compensation plans are clearly defined, and sales calculations are easily understood.
  • The company compares its compensation programs with market rates.
  • Management emphasizes confidentiality of employee information through the communications process.

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