Facing a cloud of economic uncertainty, sales leaders are getting creative about sales compensation.
Not Like Other Years
We’re in the peak of the annual planning season, when sales leaders’ thoughts (and worries) turn to sales incentives for the year ahead. Normally at this time of year, comp design conversations with Gartner clients focus on strategic and operational goals. But this year at many companies, economic uncertainty itself has become the headline, emerging as the problem to solve.
Uncertainty, of course, is a perennial challenge for incentive planning. But the techniques for managing it (de-weighting certain metrics or softening payout slopes, e.g.) can break down when uncertainty is as high as today.
Are there alternatives for sales leaders to consider when the usual tools stop working?
While there’s no silver bullet, the role of trust – specifically, sellers’ trust in the intent and fairness of the sales compensation program – is resonating strongly with clients I talk to these days.
Everything Goes Better with Trust
But sellers are coin-operated, some will say. If you get the cash right, you’ll get the results.
That’s a topic for another day, but even if incentive payouts were ‘just’ coins propelling sellers forward, cash rewards can feel less attainable to sellers who lack trust in the fairness and good faith of their leaders.
Good Story – But Is It True?
Yes. Plenty of studies confirm that trust is more than just a ‘feel-good’ organizational play. Academic research demonstrates a clear link between seller trust and motivation. In fact, one study even hints that trust itself may help explain the well-known truism that “sellers don’t leave a job – they leave a manager.”
How Sales Leaders Earn Sellers’ Trust
Like most compensation decisions, the ‘right’ way to strengthen seller trust will depend on the specific challenges and unique culture of each organization. That said, there are a few universal success drivers that sales leaders must keep in mind along the way:
- Get the facts first. A common challenge is the ‘reality of perceptions.’ That is, if sellers believe quotas or comp plans favor some sellers unfairly, they will feel less motivated whether it’s true or not. Leaders can conduct formal fairness tests as part of an annual plan health assessment, but just initiating informal conversations with sellers and first-line managers can have a motivating signal value. Gartner’s corporate communications practice, a sister program to Gartner for Sales Leaders, even published a case study (Trust-Building Pay Equity Communications) on this very topic.
- Talk about it. Some sales leaders hesitate to share the details of their quota allocation algorithms with sellers, fearing it will invite nitpicking. But it doesn’t have to be all-or-nothing. You can explain the general approach to setting quotas fairly, emphasizing special steps taken to ensure parity, without getting into calculation details. And if you can point to data that demonstrates the fairness of your quota methodology, by all means, share it (in summary form) with the team.
- Amplify trust through reporting lines. There’s only so much that top sales leaders can accomplish through mass communications and training. Sales directors and sales managers themselves must see and believe that leadership is committed to incentive fairness and parity. They must be ready and willing to champion that message vigorously.
We’re living in a world where many of the old rules no longer hold true. Sales leaders who can spot opportunities to innovate are likely to stay a step ahead of the competition.
The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.
Comments are closed
The truth is that I thank you very much for sharing this content, I did not know that I needed to read it to understand a little more about the topic discussed.
relly nice article its very nice