To Change or Not to Change Comps…That is the Question?
There’s an unspoken rule in business: sales compensation plans need to change every year. Many companies follow this tradition, tweaking or completely overhauling their plans annually. But we’ve noticed a growing trend—more businesses are starting to question the need for constant updates.
Here’s our advice: don’t change your compensation plan unless it’s absolutely necessary. Sure, updates are essential for launching new products or addressing major shifts, but altering commission structures or bonuses can be risky. Why? The moment you announce a new plan, your sales team’s first assumption is often negative, they’ll think they’re going to earn less. This triggers a spiral of uncertainty as they crunch numbers on past deals, current deals, and their future earnings, distracting them for weeks.
So, when should you make changes to your sales compensation plan? Here’s what we recommend:
- New Products or Services: If you’re launching something new, your team needs a clear incentive to sell it. A common mistake is neglecting to update the compensation plan to include new offerings, which can lead to poor adoption and low performance. Motivate your team with a plan that rewards them for driving success.
- New Roles or Markets: Sales isn’t one-size-fits-all. If you’re creating new roles, changing responsibilities, or targeting different markets, you’ll need an updated plan that aligns with these shifts. Make sure it benefits both your business and your team.
- Fixing Flaws: Compensation plans are often built on assumptions, and sometimes those assumptions miss the mark. If your current plan isn’t working or isn’t sustainable, address it head-on. Be transparent with your team—explain the issue, present a solution, and rebuild trust through open communication.
- More Earning Opportunities: If your changes mean more money for your sales team, go for it! This doesn’t mean significantly increasing payouts—it means designing a plan that helps them maximize earnings by hitting targets, selling a variety of products, and fully engaging in the plan. Show them the potential for growth in their income.
The bottom line? If you’re making changes to your sales compensation plan, tread carefully. Sales professionals thrive on opportunity, not pay cuts. Ensure that any updates clearly highlight how they can earn more. After all, no one gets excited about making less.
