4 Tips to Prevent Sales Commission Disputes
Sales commissions disputes are prevalent at many large sales organizations. On top of wasting time and resources, disputes can place a significant drag on long-term growth.
Ensuring that salespeople receive the commission expected is just as important as making sure that salespeople meet quota and perform well. Especially considering that nearly half of employees would consider leaving a job after just 1 to 2 problems with their pay.
When organizations don’t take concrete steps to rectify compensation disputes, reps are far more likely to feel unsupported, lose interest in work, and ultimately quit.
Before we go any further, you may want to consider picking up our complete guide to resolving and reducing sales commission disputes. We created this guide to help Sales Comp Analysts and RevOps leaders identify the root causes of their commission dispute issues and create a roadmap to fixing them.
Tips to Prevent Commission Disputes
There are several ways organizations can reduce sales commissions disputes, retain top talent and allow reps to focus on what truly matters: selling.
1. Ensure reps understand their compensation plan terms
Sales commission disputes often arise after a new compensation plan has been implemented. That should come as no surprise — sales reps may still be getting their heads around the plan’s terms, so they may misunderstand how and when they should get paid.
When launching a new plan, think of it like you would a GTM strategy. You need to ensure that reps understand the nuances of your incentive program by creating a communication strategy that stretches across multiple channels. Don’t leave it up to a sprawling email to launch your new plan.
Consider organizing team huddles, one-on-ones, or even putting together a deck with sample cases that illustrate how you calculate sales comp in varying scenarios.
2. Listen to your reps and elevate concerns if necessary
A commission mistake is not something to brush off lightly. It could make the difference between profit and loss. Not to be a broken record, but sales reps will leave (and tell their network not to work for you) if your commissions are consistently incorrect or difficult to discern.
Keep an ear to the ground to spot pay disputes before they snowball into a larger conflict. If a rep refutes a commission payment, be sure to hear them out before jumping to any conclusions.
Additionally, keep tabs on other sales teams to see if they are facing similar issues. What might seem like a one-off mistake in pay could be a larger systemic issue that should be dealt with sooner than later.
Finally, don’t hesitate to elevate your concerns to upper management. Nothing will ever get fixed if nobody does anything about it.
3. Revisit your incentive compensation plan
When diagnosing a commission dispute, consider that your plan (or commission agreement) may be too complicated.
An incentive compensation plan with multiple compensable factors can lead to confusion and misdirection. A comp plan designed to incent different behaviors can often lead to misunderstanding how commission is earned.
All that said, this doesn’t mean you have to oversimplify your compensation plan design. Instead, consider adjustments such as changing the goals and language around commissions to help sales representatives better understand the plan.
Another consideration could be to create a shorter, more informal commission agreement that lays out in layperson terms the commission structure, how to maximize it, and what behaviors matter most.
4. Invest in sales compensation automation
If you’re a rep, analyst, or admin at a company with complex plans but aren’t well-equipped to administer them, you’re likely no stranger to commission disputes.
If poor technology is the primary cause for disputes, Sales Compensation as a Service (SCaaS) may be the solution you’ve been waiting for.
Up until now, effective sales compensation automation wasn’t something you could buy off the shelf. You needed a highly skilled internal team to build, manage, and maintain the system.Sales Compensation as a Service breaks down the bottlenecks and barriers that impede full automation of the sales comp process by taking on the burdensome and repetitive tasks of sales comp — coding business logic, implementing exceptions, and… Click To Tweet
SCaaS breaks down the bottlenecks and barriers that impede full automation of the sales comp process by taking on the burdensome and repetitive tasks of sales comp — coding business logic, implementing exceptions, and onboarding new members (among many other functions).
Sales reps and analysts alike can benefit greatly from this kind of software as it ensures accuracy and efficiency — even in organizations with complicated plans and strict requirements.
Put commission disputes to rest
Disputes happen more often than you might think, and you must be aware of them so that you know how to avoid them in the future.
You can reduce sales commission disputes in several ways: by developing a launch strategy for new compensation plans, improving communication around commissions and plan design, redesigning your incentive compensation plan, so reps better understand how they are getting paid, and investing in technology that increases transparency so reps can see their commission as it is earned.
If you haven’t already, consider picking up our Complete Guide to Reducing Sales Commission Disputes below. This guide will help your organization identify the root causes of commission disputes and help you create a roadmap to implementing a solution.