Sales Incentive Plan Nightmares or: The Perfection of Imperfection

In theory, SIP design is fairly straightforward, pick the measures, design the mechanics, implement. Easy, right? Wrong. All too often the process can leave even the most resilient of problem-solvers a broken, battered, husk of the consultant they once were, clawing at the walls of the sales incentive prison they have created for themselves.¹

Now, some of this can be put down to internal politics. Generally the more cooks in the kitchen, the greater the chance that your soufflé won’t rise. The more times they meet, the more they will want to alter the recipe. But that is my responsibility to manage and usually it can be done without too much setback. I am Gordon Ramsay in “Kitchen Nightmares”.

So assuming one can take care of the cooks, why is it invariably a struggle for companies to get a good plan over the finish line?

The reality is, as is often the case when applying mathematics to human nature, that logic and mechanics seldom take you to the final solution. Each component is an attempted link between human behaviour and company results. Each accelerator, a way of driving that behaviour. At this point, though, a tweed-draped economics professor will tell you of the Principle-Agent problem and give you a whole host of reasons as to why a sales plan won’t solve this problem on it’s own. A sales plan is simply an organisation’s attempt to align the agent’s interests to that of the principle.

In that sense, it is no surprise that I have seen the inclusion of behavioural metrics with significant weight on a disturbingly high number of occasions. Meeting attendance, calls placed, pipeline creation, even the use of SFDC (yes, simply logging in and creating opportunities) are all attempts to drive behaviours that align the sales person’s interests, to that of the company. Unfortunately the reality is that behavioural metrics do little more than encourage that particular behaviour. While short term behavioural metrics, on occasion… sometimes… MIGHT be helpful when a change in sales force mentality is required, in the long-term this is often seen as free cash as sales reps spend a few hours each month making sure to hit their numbers.

It also partly explains the emergence of highly complex plans with a huge number of components making the plan virtually impossible to understand – each addition and adjustment is an attempt to further align the sales person to the company. All too often though, it achieves the opposite result creating disconnected, unmotivated sales teams who don’t even bother to read the plan documentation.

These are attempts to find a perfect solution to an imperfect problem. I could go on with more examples but the moral of the story is clear: sales plan design demands the perfection of imperfection.

¹This is definitely NOT part of a dream I once had

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