Sales compensation leaders of acquisition-focused organizations often embrace the adage of “do no harm” to the acquired company. This makes sense. Sellers of the acquired company likely have a significant amount of anxiety and distraction. Yet, they are still expected to close deals and generate revenue. So while “do no harm” is fitting, sales compensation leaders still have some work to do.
Even if sales compensation plans aren’t expected to change quickly, sales compensation leaders should do these three things shortly after the corporate action closes:
- Cover liabilities
- Assess the compensation plan differences
- Track the evolving GTM strategy
Across compensation plan design, commission accounting and pay practices, there are several organizational and operational risks from:
- Deficient documentation
- Poorly defined exception handling and dispute resolution
- Inadequate financial controls
- Non-compliant pay and/or clawback practices
Sales compensation leaders should quickly address areas that may present organizational issues later on. Even if the compensation plan strategy doesn’t change, sellers may be asked to sign new terms and conditions documents that protect the organization. (See Three Frequently Missing Sales Compensation Clauses for suggestions on what may be missing from compensation plan documentation.) During this pseudo-audit, sales compensation leaders may even stumble onto better practices or lessons to be deployed back in the acquiring company.
Whether asked to deliver this assessment or not, sales compensation leaders should do a head-to-head comparison of the compensation plans from both organizations. CSOs and sales operations leaders typically value these insights but with so much going on, may not even think to ask for them. Plus, this comparison helps determine the potential impact and “drama” of switching the acquired team to the core compensation plan and philosophy of the larger organization.
Sales compensation leaders should focus on things like:
- Minimum performance thresholds
- Relative upside earnings potential
- Compensation metrics – e.g., paid on bookings versus revenue
- Calculations based on commission-rates versus quota-attainment
- Commission caps
Track GTM Strategy
Shortly after the acquisition is official, CSOs typically share their vision and near-term go-to-market strategy. Role designs, account ownership, organizational structures, and more are announced – even if it’s understood that things will continue to evolve. Where possible, sales compensation leaders should remain engaged to ensure that future GTM strategies and plans can be supported, at least from a compensation perspective.
This is not to say that sales compensation should be the leader in designing a GTM strategy. However, as an engaged stakeholder, strong sales compensation leaders help to avoid issues and raise concerns from an administrative perspective.
Sales compensation leaders should proactively lean-in during the post-acquisition integration. Even when there isn’t a rush to get the new sellers onto the existing compensation plans, there is still valuable work to do.