How to Introduce New Sales Compensation Plans

[ read time: 3 minutes ]

By David J. Cocks, CEO

No matter how you introduce new compensation plans, expect your salespeople to move through several stages in their response:


Many salespeople will deny that a change is required and will want to keep their current commission program.


Even after you've explained why the change is being made and discussed it with them, they will reject your reasoning.


Sales reps will begin to explore their options, perhaps at a competitor's office.


Your salespeople come to grips with the reality that change is required and become ready to commit to the changes.

You need to be prepared for these stages, so you can help your sales force work through them. A consultative approach usually works best - share the rationale behind the change and help reps understand how both they and the company will benefit from the new plans.

Here are some more tips that can help ease the process:

1. Consult sales associates during the process of determining new plans. Although you may believe you know what your reps want, your ear may not be as close to the pavement as you think. Asking for input can provide useful information.

2. Explain why changes are needed. When reps understand the issues and are consulted, they are more likely to buy into the solution.

3. Analyze the impact of the changes. Typically, some salespeople will come out ahead, others will see little difference, and some will see at least a temporary decline in income. Focus on those who are negatively affected. How likely are they to jump ship? If you don't want to lose those reps, perhaps there are some low-cost perquisites you could offer to soften the impact.

4. Offer a choice. Allowing sales reps to choose among several compensation plans restores their feeling of being in control. It also lets them match their tolerance for risk to their compensation, and choose the plan that motivates them most effectively.

5. Don't make exceptions. It destroys the trust between you and your salespeople. You do run the risk of losing some reps, but you'll lose more if others see you making exceptions and feel they haven't been treated fairly.

6. Remember that salespeople leave a company mainly for personal reasons or lack of good management – not for compensation.

If you follow these steps, you'll ease the transition and make it much easier to successfully implement your new compensation plans.