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Global Uncertainty Calls for Agility and Flexibility in Incentive Compensation

by: Cara DeGraff | September 30, 2020

Almost everything about running a business has changed in the last few months. But have you changed your priorities and expectations of your salespeople? A spring survey by Mercer found that 58% of organizations had not determined their response to the coronavirus pandemic regarding incentive compensation plans.

There is little doubt that companies around the world will continue to grapple with their responses to the immediate sales challenges. Those that cannot successfully recalibrate will face a reduction, not only in sales but also in market share. The products and services people buy—and the ways they buy—have shifted. And in some cases, they may never shift back. Have you examined your business conditions and shifted too? Are you incentivizing based on your old normal instead of your new normal? Whether it’s adjusting sales quotas, incenting a new product mix or implementing rewards for value tiers—there are likely changes you should be making to reflect the new reality on the ground.

It’s imperative to create solutions that drive desired behaviors, but also to optimize business performance and set the stage for a post-COVID world. As the business landscape zigs and zags, organizations will need to adopt an agile mindset that facilitates quick and robust decision-making on required actions. As you gain an improved understanding of the sales and revenue impact, it may be appropriate to make structural changes to your plan design.

Measure what matters

Once you have examined your situation, make sure you are measuring performance and behaviors that matter. One approach is Management by Objective (MBO) in which you translate an organizational goal directly to an employee objective. Remember, the goal must be SMART (Specific, Measurable, Achievable, Relevant, and Time-sensitive).

Depending on your situation, this could include adjusting KPIs to address updated business conditions. For example, emphasize revenue protection and customer-centrism, while de-emphasizing new business requirements.

Alternatively, focus more on team metrics, driving collective results, collaboration, and cross-selling. Utilize sales data to assess the impact of the pandemic on your sales roles, territories, and channels. Use sales analytics and modelling to understand the vacillating environment. Harvest data from your sales and CRM databases to monitor trends and enable agility.

Communicate. Communicate. Communicate.

There’s nothing worse than being left in the dark when times are tough. That’s why it’s important to deliver regular, transparent communications to your team to maintain focus and morale. Make sure your team knows everything you are doing to manage a dynamic, difficult situation. Provide clarity on whether changes are temporary or indicate a longer-term shift in strategy. Demonstrate your commitment to them and let them know they have your support. Make sure the sales team knows the official channel(s) for reliable communication and ensure that every leader down the line delivers a clear, consistent message.

Bouncing back

The companies best able to navigate and respond to these volatile times will be the companies that come roaring back once the pandemic is under control. In fact, according to a recent BCG study, 14% of companies were able to increase profitability during the past four recessions. So, there can be opportunity, even in difficult times. (

Perhaps the opportunity is a chance to take a good look at your sales data. Many companies struggle to meet their goals because of unorganized sales data. Should you consider automating all or part of your incentive compensation program? Organizations supported by software solutions to manage the full lifecycle of incentive programs have a strategic advantage in the marketplace. In the end, data leads to insights, and insights—one by one—add up to profit.