“Eighty Percent of my Sales Force are not making their numbers! No one will earn a bonus this year! What should I do?”

"Eighty Percent of my Sales Force are not making their numbers! No one will earn a bonus this year! What should I do?"

In a recent workshop that I taught on the subject of sales force compensation at the University of Wisconsin, one of the participants outlined a dilemma he faced—80% of his sales force would not earn a bonus due to factors beyond their control. His question: What to do?

Many executives are facing similar situations today and while the “rule” says that no bonus should be earned, common sense suggests another course of action.

We recommend that executives faced with such a dilemma make a conscious decision to write new sales-payout rules for 2009. These new rules should assure that the top players will all get a payout—in spite of bad luck or poor economic times. It should work something like this:

  • Top 1/3 of the sales force earns a uniform bonus payout (say $15,000—the amount is your choice—but usually less than a “par” bonus)
  • The next 1/3 will earn half of the top 1/3 (say $7,500); and
  • The bottom 1/3 earns no bonus.

What is the benefit? You have told your best sellers that they mean a great deal to the company and we want then around in 2010 and beyond—and you can be assured that they will be inclined to stay. And, you have also sent a message to the poorer performers.

We have often told clients that a badly-designed sales pay plan becomes a discretionary plan in the end. Well, I guess this fellow has a discretionary plan this year.

Can you rank your top performers high to low? I bet you can. Do it today!

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