New Compensation Plan for My

¶ … new compensation plan for my team at InterClean serves several key strategic and motivation functions. The directive from InterClean head office was to design a plan that drives employees to peak performance, helps the corporation meets its strategic goals and improves team performance. Working within the context of these desired outcomes, the compensation plan will be as follows.

There are three main components to this plan. The first is the escalating percentage of sales. For each new level of sales that the salesperson attains, he or she will receive an increased percentage of the gross. The second component is the bonus. There are two bonus levels, each based on gross. To achieve the bonus, the employee must reach a pre-prescribed sales level. There are two bonus levels, one that is relatively easy to reach (the sales goal) and one that is more difficult (exceeding the sales goal by a certain percentage). The third component of the system is the incentive for being the top performer, which is a paid vacation anywhere in the U.S.A. For the performer and his or her family.

This system will work for several reasons. The first reason is that the salesperson is constantly motivated by the base commission changes. These escalate every $500,000. The fact that the percentage payout increases serves as double motivation -- reach a new level not only requires more sales volume, but increases the payout on all previous volumes as well. The second reason is that the salesperson has multiple targets to achieve in order to earn a bonus. Lastly but perhaps most importantly, there is the prestige factor to the Top Performer incentive. Sales people are driven not just by money, but also by ego and narcissism. It is reasonable then, that the prospect of being recognized as the top performer is a strong reward for those salespeople at the upper echelon of the firm. Indeed, the family vacation is likely not nearly as much of a motivator as the recognition that comes with it.

The different components of this system each serve to motivate the employee to maximum performance. The first component, the percentage of annual sales volume, is a strong motivator because of the escalating effects of the percentage bonus. Each new level brings exponentially more bonus money, which encourages the salesperson to seek the next level, if only for the chance to increase the payout on past sales.

The second component is the sales goal incentives. These function not just with by meeting the salesperson's financial needs but also by placing emphasis on his or hers achievement needs. The sales person is driven by their target, as to fail to meet the target would not only be financially costly but embarrassing. The second target, the hard-to-achieve target -- is something that the salesperson can take pride in achieving. Attaining this target means more for the success and improvement it represents than for the payout that comes along with it.

The third component is the Top Performer incentive. For some sales staff, this may not serve as significant motivation as they may not feel as though they are in contention. For those high-performing staff members, however, this award gives the opportunity for bragging rights -- fulfillment of the ego. This can be powerful motivator for sales people. This incentive will work for the strong sales people, so while the others may not push themselves to attain it, all of the best sales people will and in doing so they will drive the most new business.

For the company, the sales people's compensation should support overall corporate strategy. In this case, the sales team needs to be motivated to sell as much volume as possible at profitable prices. This compensation system motivates the sales people on an individual level, wherein bonuses are used to motivate all sales people. These bonuses will be valuable to the lower-level performers because they will be able to maintain attainable targets.

If financial gain is not sufficient motivation -- and with sales people it often is not -- then this compensation plan will bring additional motivation to the sales force by allowing them to challenge their needs for achievement. The sales team is able to focus on not just beating the numbers, but beating themselves.