Your salespeople don’t trust they’re compensated accurately—so your payroll administrators are occupied with resolving pay disputes. Your sales leadership isn’t accurately forecasting their team’s performance—so your company isn’t forecasting compensation expenses accurately. Your company isn’t tracking sales representative performance in real time—so your executives make decisions based on outdated information.
Sound familiar? These problems happen when you and your team use incentive compensation templates that don’t drive results. So how can you implement your compensation strategy effectively, accelerate sales performance management and make smarter data-driven decisions?
In this post, we’ll cover five best practices for creating incentive compensation templates that will help you get the most out of your incentive compensation strategy.
1. Establish a Single Source of Truth With Data Automation
Ensure every user works with the latest numbers. This entails the centralization of incentive compensation data with data automation and incentive compensation templates that will automatically integrate your data sources, such as CRMs, ERPs and HRISs, and calculate complex compensation calculations.
This removes tedious, manual and error-prone data consolidation to ensure your stakeholders work with the latest numbers. When your sales performance, accrued bonuses and expected earnings are available in real time, this means:
- Your salespeople will know what they’ll earn next paycheque and worry less about their compensation’s accuracy.
- Your company can use the most up-to-date numbers to forecast compensation with greater accuracy.
2. Implement Audits for Transparency and Fewer Disputes
Gain trust from your salespeople in your incentive compensation reports with greater transparency. Without a clear and comprehensive view of sales compensation, your salespeople may focus more of their time calculating their own compensation rather than closing deals, which can plummet your sales performance.
Your incentive compensation plan should track compensation and quota changes to minimize compensation disputes and eliminate shadow accounting.
3. Customize for Productivity Variables
Consider how your company motivates and evaluates each salesperson’s performance. Which productivity quotas and metrics will align with their sales variables, fuel competitive spirit among your salespeople and maximize their productivity?
These are some common metrics:
- Win rate
- Average deal size
- Percentage of new business
- Percentage of renewal
Your incentive compensation plan should include a wide range of productivity quotas and metrics—to drive sales performance—as well as include criteria to categorize revenue.
4. Customize for Business Intelligence
Align your salespeople’s productivity metrics with your company’s KPIs. For example, tracking sales by region can show how your company is performing in a new market, and tracking sales by product can show the success of a new release. The selection of these productivity quotas and metrics for your incentive compensation template can deliver valuable business intelligence to your company.
Knowing your sales team’s performance—with more accurate estimates of commissions—will not only inform revenue planners to forecast with more precision, but also inform sales leadership to forecast commission expenses with greater accuracy.
5. Personalize for Security and Better Stakeholder Experience
Give your stakeholders access only to the information that’s pertinent to them so they can trust that no one else can view their own sensitive data.
Your incentive compensation template should filter overlays by these stakeholder levels:
- Payroll staff: To administer payments with greater accuracy.
- Individual salespeople: To view their own compensation and performance against their quotas and benchmarks.
- Managers and their team members: To view their team’s performance against dimensions and benchmarks to optimize performance.
- Executives: To make smarter, data-driven compensation decisions.
Your Incentive Compensation Plan
When your organization’s incentive compensation templates reflect your compensation plan, every stakeholder benefits. Your salespeople submit fewer pay disputes. Your sales leadership forecast performance, quotas attained and incentives paid with greater accuracy. Your payroll administrators aren’t overwhelmed with disputes and your executives have a clear view of company performance.
Incentive Compensation Software
Vena’s Incentive Compensation Management solution manages your entire compensation process. By improving payment accuracy and automating complex compensation calculations with unified data, your company can implement its compensation strategy to its full potential to accelerate sales performance management and make smarter data-driven compensation decisions.
Get started with Vena's free payout and approval template below.