The Complete Guide to Sales Force Incentive Compensation

How to Design and Implement Plans That Work

The Complete Guide to Sales Force Incentive Compensation

Authors: Andris A. Zoltners, Ph.D., Prabhakant Sinha, Ph.D., Sally E. Lorimer
Pub Date: August 2006
Print Edition: $49.95
Print ISBN: 9780814437735
Page Count: 496
Format: Paper or Softback
e-Book ISBN: 9780814429723

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Table of Contents

"Preface viii

Acknowledgments xi

Chapter 1 Sales Force Incentive Compensation and the Successful

Sales Organization

Introduction 2

The Drivers of Sales Force Compensation Change 12

The Sales Force Compensation Challenge 17

The Sales Management System 19

The Role of Incentive Compensation Within the Sales

Management System 23

Diagnosing Sales Force Issues 29

How This Book Is Organized 32

Chapter 2 Reviewing a Current Incentive Compensation Plan and

Setting Objectives for a New Plan

Introduction 40

Is It Really an Incentive Compensation Plan Problem? 41

An Overview of a Sales Incentive Plan Assessment Process 44

Assessment of Current Sales Compensation Plan Consequences 45

Assessment of Current Sales Compensation Plan Consistency and

Compatibility 76

Developing New Plan Objectives 83



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vi Contents

Chapter 3 Plan Design Fundamentals

Introduction 93

Sales Compensation Plan Design Terminology 94

Chapter 4 Plan Design Part 1: Determining the Correct Pay Level

Is Your Sales Force Pay Level Correct? 108

The Range of Sales Force Pay Levels 112

How to Determine the Right Sales Force Pay Level 115

Conclusion 137

Chapter 5 Plan Design Part 2: Finding the Best Salary–Incentive


Introduction 141

Do You Have the Right Pay Mix? 143

The Range of Salary–Incentive Mix 151

How to Determine the Right Salary–Incentive Mix 160

A Pay Mix Scorecard 179

Chapter 6 Plan Design Part 3: Selecting Performance Measures

Are You Using the Most Appropriate Performance Measures to

Determine Your Incentive Plan Payout? 184

Types of Measures 187

How to Determine the Most Appropriate Sales Incentive

Measures: An Advisory 192

How to Determine the Most Appropriate Sales Incentive

Measures: Specifics 198

Chapter 7 Plan Design Part 4: Determining the Right

Performance–Payout Relationship

Introduction 226

Is the Most Appropriate Performance -- Payout Relationship

Used for Determining the Incentive Plan Payout? 227

Representing Performance -- Payout Relationships 228

Decision 1: Bonus Plan or Commission Plan? 231

Decision 2: Progressive or Regressive Plan? 237

Decision 3: Caps or No Caps? 243

Decision 4: Pay from the First Dollar or from Goal or a Fraction

of Goal? 245

Decision 5: Single Measure or Multiple Measures? 251

Concluding Insights 261

Chapter 8 Evaluating Proposed Sales Incentive Compensation

Plan Alternatives and Selecting a New Plan

Introduction 265

An Overview of Candidate Sales Compensation Plan Assessment 267

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Contents vii

Quantitative Assessment of a Candidate Sales Compensation Plan 271

Qualitative Assessment of a Candidate Sales Compensation Plan 295

Future-Proofing Assessment of a Candidate Sales Compensation

Plan 306

Conclusion: From Objectives to Reality 308

Chapter 9 Setting Effective Goals and Objectives

Introduction 313

Are Your Sales Force Goals Appropriate? 314

Types of Goals 327

How to Set Effective Sales Force Goals: a Five Step Process 330

Tracking Performance Against Goals 369

Goal-Setting Recommendations 372

Concluding Insights 375

Chapter 10 Increasing Sales Force Motivation Through Sales

Contests, SPIFFs, and Recognition Programs

Introduction 378

Sales Contests and SPIFFS 380

Recognition Programs 403

Insights 407

Chapter 11 Making an Effective Transition with a Major

Incentive Compensation Plan Change

Introduction 410

Sales Incentive Compensation Plan Change and the Sales

Management System 415

Challenging Sales Incentive Compensation Plan Transitions 421

A Sales Force Change Process Framework 435

Chapter 12 Incentive Compensation Plan Administration

Introduction 454

Is the Incentive Compensation Plan Administered Well? 458

IC Plan Administration Systems and Processes 461

How to Design an Effective IC Plan Administration System 476

Summary 489

Index 491

About the Authors"

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