what a ceo needs to compensation - staffing industry analysts · 2020-02-05 · what a ceo needs to...

What a CEO Needs to Know About Sales CompensationConnecting the Corner Office to the Front Line

www.SalesGlobe.com770 337 9897

February 2013

© 2013 SalesGlobe

A Bit of Background

Advisory and Consulting Services-Sales Process Innovation-Sales Strategy-Sales Training and Coaching-Incentive Compensation

www.SalesGlobe.com

The Worldwide Leader in Innovative Workforce Solutions - Recruitment and Assessment-Training and Development-Career Management-Outsourcing-Workforce Consulting

www.ManpowerGroup.com

Mark Donnolo• Managing Partner- SalesGlobe

and the SalesGlobe Forum• 20+ Years Sales and Marketing

Effectiveness• Closet “Art School MBA”• Upcoming Book: What Your CEO

Needs to Know About Sales Compensation

Doug Holland• Director, HR &

Compensation, ManpowerGroup North America

• Leads design of base and variable pay programs

• Oversees HR functions for HQ and ManpowerGroup Solutions

© 2013 SalesGlobe

Sales Effectiveness Expertise... Our Sole FocusSalesGlobe’s sole focus is working with our clients to get real improvements in business results through revenue growth and productivity improvement. We develop practical solutions around strategy, offer and value proposition, organization effectiveness, sales process, sales team development, and incentives.

New book, published year-end 2013 by Amacom.

© 2013 SalesGlobe

Why the Book?

What do a beer truck driver, a sales rep, a pack of dogs, and 50 C-Levels have in common?

They understand the power of incentives.

© 2013 SalesGlobe

Getting Strategic

• Not a Text Book

• A Need for C-Level Insight

• Connecting C-Level to Front Line Incentives Makes Sales More Effective

• C-Level Views and Advice

• Stories from the Front

• Essential Models and Tools for a C-Level

• The Right Questions to Ask

© 2013 SalesGlobe

• Accenture• Agilent• Anheuser-Busch• AT&T• Bellcore• BellSouth• BellSouth Advertising and Publishing• Blue Cross Blue Shield of Texas• Broadcom• Browning-Ferris Industries• Cablevision• Caja España• Central Garden & Pet• Choicepoint• CIGNA• CoalTek• Compass Group• ConEdison Solutions• Con-way• Corestaff• Crawford & Company• Danka• Enrev• Equifax• FleetCor• Fujitsu Network Communications• GBC

• GE Capital• G&K Services• Health Management Systems• Honeywell• IBM• ICF International• Idearc• Ingersoll-Rand• Intermedia• International Paper• Iron Mountain• Johnson & Johnson• KPMG• Kronos• LexisNexis• Lotus• M.A. Hanna• Marriott• Merial• Mohawk• Motorola• National Westminster• NationsBank/Bank of America• Nationwide Insurance• Nortel• Novartis• Novell• Office Depot

• Orange• Premiere Global Services• Printpack• PwC• Qwest• Rainbow Media• Robert Half• Sage Software• SBC• Sea-Land• Signature Consultants• Sodexo• Southern Company• Southern LINC• Spherion• Springs Industries• Sprint• Snelling• Staffing Industry Analysts• Staples• Symbol Technologies• Technisource• The Weather Channel• Times Mirror• UPS• UPS Capital• Verisign• Verizon

C-Level Insights From Leading Companies

© 2013 SalesGlobe

Topics

• Some Top Challenges

• A Common Dilemma

• 10 Critical Factors to Consider

• How You Can Take Action

© 2013 SalesGlobe

Some Top Challenges

© 2013 SalesGlobe

Plan Complexity

“I’m not clear on exactly how I’m paid. I just hope the check is right.”

45%

Some Top Issues

Setting Effective Quotas“You hit your quota and get rewarded with a bigger quota next year. It’s not related to opportunity.”

52%

Driving Solution Selling“The plan doesn’t support solution selling. It drives an aggressive sales process and we need to be more consultative.”

36%

Keeping the Organization Engaged

“Our reps aren’t hitting their objectives in this economic environment. We need to keep them focused.”

29%

Supporting the Sales Strategy and Sales Roles

“Our plan promotes behaviors that are different than our strategy.” 39%

Differentiating Top Performers“Our highest earners aren’t necessarily our highest performers. We can’t attract and retain the right talent.”

42%

© 2013 SalesGlobe

The Common Dilemma of Edward

• A new strategy: partnering for software and services to complement their hardware

• Two SVPs in a covert coffee shop “off-site” in Dallas 10 months after the fact

• How should the incentive plan work? A task force, surveys, analysis, and alternative designs

• Edward, the CEO, heard updates throughout the process, deferred to the executive steering committee

© 2013 SalesGlobe

• A simple plan

The Common Dilemma of Edward

What was missing in the direction, the process, the engagement?

• A bridge plan… Introduction delayed until Q2, loss of credibility and focus

• Final CEO presentation…

o New questions about product mix, how the plan pays…

o “Have I seen this before?”

o Wants to revisit the plan with a list of new questions

• A high level of engagement, too late, from a high-IQ CEO

• Got steering committee approvals

© 2013 SalesGlobe

How Can We Make the Corner Office to Front Line Connection?

• Communicating the priorities to which incentives connect.

• Challenging the common incentive assumptions like “Do incentives really motivate?”

• Connecting in the field and riding with the reps. Seeing from the rep and customer perspective.

Let’s Get Specific…

We really try to understand who the customer is and what our value proposition is to that customer. If your compensation plan doesn’t align with the strategy and the segments you want to target, then you’re going to be working at cross purposes.” –CEO, F500

“People, confuse incentives with alignment, and they jump to incentives as the answer, as opposed to the hard work of alignment.” –CRO, F500

© 2013 SalesGlobe

1. Connect to the Sales Strategy

© 2013 SalesGlobe

Strategic Context: The Revenue Roadmap

The Revenue RoadmapInsight

Voice of the Customer

Macro Market

EnvironmentCompetitor

PerformanceBusiness

Performance

Enablement

Sales StrategyProducts

& ServicesSegmentation

& TargetingValue

PropositionApproach to

Market

Customer CoverageSales

ChannelsSales Roles & Structure Sales Process Sales

Deployment

Incentive Compensation

& QuotasRecruiting

& RetentionTraining

& DevelopmentTools

& Technology

Charts an actionable growth plan.

Matches roles, resources, and process to customer needs.

Aligns execution with the growth strategy.

Provides information for planning and strategy.

© 2013 SalesGlobe

Financial

C-Level Goals

“We want to align our best sales resources with the right buyers further up in the organization.”

“We want to execute our strategy of offering our full portfolio of solutions based on customer needs.”

“We need to build the sales organization of our future with one face to the customer.”

“We need to break the complacency in our sales culture.”

“We want to drive twice as much sales productivity three years from now.”

C-Level Goals

© 2013 SalesGlobe

2. Get Insight on Your Environment

© 2013 SalesGlobe

Insight

© 2013 SalesGlobe

Knowing How You Grow

The organization grows from year-to-year, not in a straight line but by losing and gaining in certain sales strategy components.

29% New Customer Selling

10%

CustomerPenetration

14%

Revenue Retention

82%

Revenue Churn18%

Revenue Year 1

100%

Revenue Year 2

106%

6%

Benchmark Example

© 2013 SalesGlobe

Foundation for:-Understanding growth-Planning the strategy-Aligning coverage-Supporting with compensation

And Aligning it to the Strategy

2. Buyer Penetration

TotalGrowth

This Year’s Revenue

1. Retention

Customer Growth

Last Year’s RetainedRevenue

4. New Competitive

Wins

5. New Markets

Market Growth

Components of Revenue Growth

3. ProductPenetration Pr

oduc

t Gro

wth

© 2013 SalesGlobe

Knowing Your Market- SIA and SalesGlobe Staffing Incentive Comp Survey

2013 Staffing Industry Incentive Comp Survey Now Happening

© 2013 SalesGlobe

3. Using a Proven Process to Align the Team

© 2013 SalesGlobe

C-Level Goals & Sales Roles

TargetPay

Pay Mix1

2Upside

Potential

3Performance

Threshold

4

5Levels & Timing

6

Measures & Priorities

Evaluation

12Operations

11

Governance

10

The Sales Compensation Diamond

Objectives & Quotas

9Team

Alignment

8

Mechanics

7

© 2013 SalesGlobe

4. Motivate the Breed that You Need

© 2013 SalesGlobe

Customer Growth

TotalGrowth


Market Growth



Prod

uct G

row

th

Account Acquisition

Motivating the Breed That You Need

Account Management

Service Delivery

© 2013 SalesGlobe

Customer Growth

TotalGrowth


Market Growth



Prod

uct G

row

th

Specialization- Product or Market

New Opportunity Pointing


© 2013 SalesGlobe

Customer Growth

TotalGrowth


Market Growth



Prod

uct G

row

th

Multi-Role Hybrid


© 2013 SalesGlobe

90%

TTC (Target Total Compensation)

Pay Mix and Upside Potential

10%10%+

30%

30%+

50%

50%+Upside Potential: 200% - 300%+ of Target Incentive

Target Incentive

Base Salary

Account Acquisition

Account Management

Service Delivery

70%50%

© 2013 SalesGlobe

5. Be a Reverse Robin Hood

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The Reverse Robin Hood

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The Bus Protocol

Moderate Threshold

What Portion of Quota Would Recur Without the Rep?

Pay from First Dollar

High Threshold

Slow Ramp from First

Dollar

None Full QuotaEvent

Annuity

What is the Typical Type of Sale?

© 2013 SalesGlobe

6. Have the Right Level of C-Level Involvement

© 2013 SalesGlobe

Getting C-Level Involvement Right

“My role, at the end of the day, is for sales to function as a center of excellence. I sit down with the people and make sure that we’re thoughtful about the strategy, the insights we’re building off of.”

Chief Revenue Officer, F200

© 2013 SalesGlobe


“As a CEO I want to understand the targets that align with our priorities. How can we align the financial, key performance indicators, and motivators with those levels of value? “The way I’ve always thought about it is: where is a dollar a dollar, and where is a dollar not a dollar? I think about sales compensation from a perspective of what’s strategically important to the business, and how we can motivate people to that end.” CEO, F1000

© 2013 SalesGlobe


“If the CEO is getting involved in the details at the wrong level, it can lessen our effectiveness. The effect of making tweaks on the plan and adjusting the payout curves can be intellectually intoxicating. Millions of dollars can shift from one end of the plan to the other. It can draw an executive in too much at the wrong level of detail, rather than staying strategic.”VP Sales Operations, F50

© 2013 SalesGlobe


“Our CEO got involved this year at the end of the process. We were pretty much done with the plans, and then all of a sudden he wanted to take a look at them. We had to change the plans, and it took us another month and a half to get them approved, which made it interesting.”Director of Compensation, F500

© 2013 SalesGlobe


“Does the sales compensation plan support our strategic initiatives for the year? How would that have affected our top 20 percent of performers? What is the behavior you want to drive next year? What are the risks of this strategy, and what are the potential long term benefits?” President, F500

© 2013 SalesGlobe


“We lived on the road for 7 straight weeks, and we would go to a city and have a big meeting but then we’d hit three more locations that were within a jet ride to that office and it was pretty much the same message. And it was global – Asia Pacific and Europe. We touched 67% of the employees.”

President, F50

© 2013 SalesGlobe

Effective C-Level Involvement

• Involvement at the right level is important.

• Leading change personally demonstrates commitment.

• Avoid CEOs in the details… It can wreak havoc.

• Getting input early and periodically.

• Fewer options. Less is more.

“Leadership to me falls into three brackets. One is you need to deliver your results clearly. Two is you need to remove obstacles to getting to those results. The third is you have to grow your talent. A really good comp program aligns the activities you want to drive and measure with how you reward people, and makes sure that a few things are happening.” –President, F1000

“The CEO will go to the front line of the sales people in this business and he’ll ask them, ‘How’s the compensation plan working?’ He’s checking to see if his front line sales team understands the why of compensation vs. just the what.” –President, F 500

© 2013 SalesGlobe

7. Ask Insightful Questions

© 2013 SalesGlobe

Top Questions C-Levels Ask

Are we driving the right behaviors? 65%

What are the financial returns and risks? 53%

Does it align with the strategy? 40%

How will it affect recruiting, retention of top people? 34%

Is it easily understood? 20%

© 2013 SalesGlobe

C-Level Question Dimensions

oHow is each of the five C-Level Goal areas represented by the plan or by how we manage?

QuestionRepresentationDimension

oWhat behaviors will this motivate that support or conflict with our C-Level Goals?

Motivation

oWhat are the numerical, measurable results we expect in each of the C-Level Goal areas?

Results

oWhat other factors, beyond the compensation plan, are we counting on for these results?

Dependency

oWhat are the risks of the program not working or the dependencies not happening as planned?

Risk

oHow can we simplify the approach and make the message clearer?

Simplicity

oHow will we successfully implement this change and what is the C-level role in that change?

Change

© 2013 SalesGlobe

Artistic creativity which is focused on expression, is usually mis-targeted and produces little more than initial excitement. Functional creativity, however, is oriented toward solving an issue or meeting an objective.

Functional Creativity and Artistic Creativity

•Targeted toward expression

•Minimal or no constraints

•Targeted toward an issue or objective

•Numerous constraints

Artistic Creativity

Functional Creativity

© 2013 SalesGlobe

Known Approaches

Conditions

Discovery

Application

Creative Quotient Principles

The Creative QuotientSM

Leveraging a creative process and principles, designed for sales, can increase the effectiveness and impact of the team.

The Creative Quotient- Innovating Your Solutions

© 2013 SalesGlobe

• Over 30% aren’t ready in month one.

• Over 50% of companies adjust quotas.

• Most don’t reflect actual market or account opportunity.

A Quota Quandary

© 2013 SalesGlobe

Flat Quotas

Historic View

Opportunity-View

•Assumes All Opportunities and Resources are Equal

Historic Quotas•Assumes History Predicts

the Future

Market Opportunity Driven

•Correlates Predictors of Potential

Account Opportunity Driven

•Considers Pipeline and Market Variations

Account Planning•Uses a Living Account Planning

Process to Set Goals and Coach to the Plan

Most Common Quota Methodologies

© 2013 SalesGlobe

Motivators of Change

Opportunity

Gain Benefit

Timeframe

Future

Avoid Pain

2.Risk Reduction

1.Aspiration

Now 3.Near-Term Gain

4.Burning Platform

MotivationalStrength

© 2013 SalesGlobe

1. Participate in the SIA SalesGlobe Survey

2. Get Your Sales Comp Report CardWhatYourCEONeedsToKnow.com

4. Use the Sales Comp ToolkitSalesGlobe.com

3. Get the BookHere, Amazon.com, BarnesandNoble.com

Take Action

© 2013 SalesGlobe

Thank You

www.SalesGlobe.com

Questions and Counsel:Mark Donnolo- [email protected]

SIA SalesGlobe Survey

54

• How to attract and retain top performers through compensation, and how to prevent overpaying the underperformers.

• Measuring performance at the correct levels for each role.

• Motivating strategic account sales.• Setting equitable and profitable sales goals.• Understanding and motivating sales management.• Communicating and implementing the sales compensation plan,

and directing change management.

It’s the single biggest expense for most organizations with the motivational power to move financial mountains, but many executives squander the opportunity sales compensation presents. What Your CEO Needs to Know about Sales Compensation is the first book to address sales compensation challenges from a C-suite perspective. It focuses on the top challenges in companies today, offers logical leadership approaches, tools, and models for dealing with each of these issues, and shares stories from top sales executives in leading companies. The C-level perspective of this book will generate interest for readers up and down the corporate ladder, from the sales organization to human resources who want to know what the CEO should know, to the C-suite themselves. The book will help business leaders at all levels to develop sales compensation programs that are aligned with the business objectives for the entire company.

Key challenges addressed in the book:• The right (and wrong) ways for C-level executives to become involved

in the sales compensation process.• Essential questions for C-level executives to ask the sales

compensation design team.• An understanding of how sales compensation supports the overall

business strategy.• Ways to determine if problems are really sales compensation

challenges or larger sales strategy issues.• How to clearly define and differentiate sales roles to capture revenue

growth, and how to compensate each role.

What Your CEO Needs to Know About Sales Compensation-Connecting the Corner Office to the Front Line

Pre-order the book now on Amazon.com and BarnesandNoble.com. Get a 25% discount and send your order confirmation to [email protected] for your first two chapters and report card now.

The book includes:•Perspective from Mark Donnolo, who has spent 25 years designing sales effectiveness and sales compensation plans for Fortune 1,000 companies.•Logical, proven approaches for solving top sales compensation challenges.•Tools and models for connecting the strategy of the business to the front line sales compensation plan.•Stories, examples, and ideas from C-level executives in Fortune 1,000 companies on how they’ve made sales compensation work effectively for their businesses.

© 2013 SalesGlobe

SalesGlobe is a leading provider of sales strategy consulting, sales operations services, and leadership coaching to help business to business sales organizations increase their performance. SalesGlobe works with organizations dealing with challenging growth issues to develop actionable solutions and real revenue results. Services include:

• Enterprise and Sales Strategy Alignment. Working with CSOs to connect to the corporate strategy, implement best practices, and gain significant revenue growth.

• Sales Transformation and Productivity Improvement. Making major changes and implementing proven levers to increase growth and profitability.

• Competitive Intelligence and Benchmarking. Capturing hard-to-find competitor and market information on practices and issues that provide intelligence that goes beyond just the numbers.

• Sales Compensation and Incentive Design. Developing methods to motivate and drive performance with your sellers.

• Sales Organization and Sales Process Design. Creating the most effective roles and sales process for your strategy.

• Sales Coverage Strategy and Channel Management. Aligning the right channel mix and programs for your partners.

• Sales Team Development and Coaching. Building sales and solution capabilities from your front line through sales management.

• Sales Operations Improvement and Management. Optimizing and operating the critical support roles for your organization.

• Sales Process Innovation. Building creative solution selling capabilities in your sales teams to close those hard-to-win deals that are critical to your forecast and results.

SalesGlobe sponsors the SalesGlobe Forum, a leadership community, research, and advisory organization of senior sales executives. Our Board of Advisors includes executives from top companies and business schools.

To get more information on solutions for your organization and to understand how you can make your strategy and organization more effective, visit SalesGlobe.com.

Background

Consulting Coaching Content Creativity

© 2013 SalesGlobe

How Does Your Organization Rate?Your Strategic Sales Compensation Report Card

Get Your Sales Comp Report Cardwww.WhatYourCEONeedsToKnow.com

what a ceo needs to compensation - staffing industry analysts · 2020-02-05 · what a ceo needs to...

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