Many companies that we work with are frustrated with some aspect of sales compensation and are looking for answers on how to stop the pain. Often they embark on quick fixes that make them feel like they are doing something, but do not treat the underlying issues. It’s like going to the doctor when you have a headache and upset stomach and want to feel better, and your doctor immediately prescribes some aspirin and antacid medicine. Immediate relief – perhaps, a cure – maybe – maybe not.
Since your symptoms may be caused by a variety of conditions, your doctor asks questions and runs some diagnostic tests to determine your illness. Only after the exam, will a diagnosis be determined and a treatment be prescribed. Had your doctor prescribed medicines to mask the pain prior to the diagnosis, a dangerous condition could have quietly escalated while you popped the Prilosec and Tums.
One of the enlightening aspects of my work as a sales compensation process specialist, is that while many client situations may look alike initially, their root causes are rarely the same.
We employ an “inside out” approach to identifying root causes before prescribing solutions and through diagnostics, we identify three major types of problems:
Level 1: Simple Processing Errors
These are situations where the business evolved but the business processes, technology and jobs behind them did not. As a result, workers struggle with the system and the field struggles with the results.
Level 2: External Issues
A good example of an external issue is being dependent on an outside company for a data feed. You must influence the external organization to give you what you need and when you need it. Often the people with the influence don’t know what their organization’s need, so a few cycles go by (or many) before the right information is provided and the system stabilizes.
Level 3: Organizational Issues
Organizational issues come in all flavors but typically involve a lack of two way communication / comprehension. For example,
- Senior management not understanding the capabilities and resource requirements of the sales compensation team because they assume commission processing is “easy”.
- The compensation function being split across multiple departments having different priorities and personalities that get in the way of getting important work done
- Capacity and skill issues,
- Excessive churn of the compensation plan with little time to implement.
Employing open and objective communication (often from an outsider) helps improve awareness allowing these types of issues to be addressed.
Interestingly, most companies have Level 1, 2 and 3 causes simultaneously so it is very important to flush these issues out up front so that the right projects can be organized and executed.
Like a doctor diagnosing a patient, an inside out approach can be used up front to properly assess, identify and treat the issues that have taken root. By doing so, improvement projects will be properly focused and will deliver the measurable results expected by all stakeholders.