Like every industry, we are also trying to inject all the gaps lost in the Covid era with that hoping to see a good reality. But this pandemic is going to adversely affect in the coming year for most of the businesses. Though some of the companies have still seen an uptick in their sales, using commission tracking software could be one of the factors to see such good sales results.
Below are some points to help you better think about sales matters while knowing the implications of Covid-19 on sales compensation.
1. Alignment with Executive Compensation Adjustments
When business conditions change, executives’ compensation may be adjusted accordingly. Salary or fixed compensation may become a more common form of incentive in the future. Companies should take note of these adjustments and make necessary adjustments to their downstream compensation plans, such as those for sales units.
2. Be able to convey ideas and concepts
If compensation is altered in response to COVID-19’s economic impact, the alterations should be communicated to all those who will be impacted. Changes and the reasons for them need to be discussed in a one-hour conference call meeting. Sending them a “corporate” email with no way for them to respond will have the opposite effect intended. For such alterations in commissions use commission tracking software.
3. Payout Gates Should Be Decreased or Removed
There are often “gates” in sales compensation plans that prevent payments of commissions or incentives unless certain performance metrics are met. Consider lowering the thresholds of these gates if this is the case. Remove this form of compensation if these goals are unachievable and replace it with other forms of compensation. As many people as possible need to be enthused, motivated, and actively selling.
4. Quotas should be reduced
If sales revenue is expected to fall by 10%, the company’s revenue targets for sales should reflect this. Executive management and sales must work together to ensure that key sales executives are retained and morale is boosted. If this or any compensation adjustment has an expiration date, make sure to put it in writing.
5. Incentives that only apply once
If you want to keep your long-term compensation plans intact, one-time incentives like bonuses, “spiffs,” or sales contests are an excellent option. A great way to get everyone involved and focused is to use this method. Incentives don’t have to be monetary all of the time.
6. When necessary, limit Incentive Pay (Temporarily)
The good news is that COVID-19’s impact on revenue has been felt by some companies. Such pay can become a “windfall” that is difficult to maintain. Caps on top performers and employee retention are inextricably linked. However, a temporary solution to change the incentive to a reasonable fixed amount may be acceptable to both parties. Consider this carefully as before, make this clear and explain the business rationale for this change.
7. Tread Lightly if You Must Cross Clawbacks
Clawbacks in sales compensation plans, like incentive pay caps, should be evaluated in the context of the current health crisis. To determine if the compensation recovery was caused by the COVID-19 events, each instance must be examined. Based on your company’s financial health and quarterly review, you may want to suspend or modify this portion of sales compensation.
Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area.