Eliminating Sales Comp Silos with a Center of Excellence – Lessons from Blue Yonder, VMware, and Siemens
Running a global enterprise is not without its share of challenges, particularly when it comes to eliminating the silos involved with operating sales compensation.
Many enterprise companies feel the pains of 3 silos in particular: ensuring Human Resources (HR) matches new sales reps to the right comp plans; adapting go-to-market (GTM) strategies to the limitations of local geographies; and understanding data that’s siloed across many systems.
If we could integrate the various factors of sales comp, especially when spread throughout the globe, we’d be much more closely aligned to the business objectives.
Thankfully, during Forma.ai’s CompOps 2023 conference, sales comp leaders from Blue Yonder, VMware, and Siemens provided us with a solution: “Creating a Sales Compensation Center of Excellence.” Hear how it has helped them eliminate silos in their orgs.
What is a Sales Compensation Center of Excellence?
A Sales Compensation Center of Excellence (CoE) is a group of experts that unifies the company-wide approach to designing and/or executing on sales compensation across the globe. It is mostly seen in enterprise companies.
It requires recognizing the nuances across all geographies and specific business units and applying the same fundamental frameworks and principles throughout the organization.
As defined by Aya Kawashima, Director, WW GTM Incentive Design at VMware:
To me [Center of Excellence] is the essential function for the company to effectively design and execute the sales compensation plan to align the entire sales organization based on one single strategy to meet the company objective.
What is the Role of a Sales Comp Center of Excellence?
The CoE can span one, few, or multiple areas of expertise, depending on the company. It could be purely a strategic function that focuses on sales comp framework and governance, or it could also execute the framework and comp plans, acting as a day-to-day admin function as well.
For Stephen Long, Head of Global Sales Compensation at Blue Yonder, the CoE does both. It provides proper governance, harmonization, and oversight to ultimately eliminate discrepancies and create equity in the way people are paid, all the way through from strategy to execution.
“One of the most important things is creating equity in how we treat and pay people in similar roles in the organization,” explained Stephen Long. “There is one point of contact for the organization for anything [sales] compensation related.”
This involves a broad sweep of activities for Stephen’s CoE that can range from incentive design to new role creation, market pricing, and even administering compensation, covering a vast array of functions.
However, a CoE does not have to serve a comprehensive role. For Elizabeth Walgram, Senior Director, Sales Compensation at Siemens, her CoE team provides governance over the strategy and design of sales comp, not the execution. The same is true for Aya’s CoE team at VMware.
They think through what types of sales incentive plans they should have, how to design comp plans for different roles, and what policies and procedures they should have in place. However, the CoE can be flexible. Elizabeth’s CoE has evolved significantly over time and may evolve to include governance over sales comp execution.
What is the Structure of a Sales Comp Center of Excellence?
Because it can cover a wide range of components, the structure of the CoE isn’t set in stone. A CoE can organically fit within sales operations, finance, or even HR, depending on the company’s specific needs.
Elizabeth shared that at Siemens, the Sales Comp CoE is under the Sales organization. For Aya, it is under Sales Operations Data which leads into Sales Data. Stephen has been in one CoE under Sales Operations and one under HR.
No matter the structure, Elizabeth emphasized that the leadership around creating a Sales Compensation CoE is critical to guarantee consistency and prevent any form of disconnect.
For our three sales comp leaders, a Center of Excellence has been pivotal in keeping sales teams across the globe aligned on a single strategy. Here’s how they eliminate silos in hiring, GTM strategy, and data.
Eliminate Hiring Silos
The Sales Compensation Center of Excellence can play a pivotal role in eliminating silos between Human Resources and Sales Compensation when role mapping and hiring, which was a major concern highlighted by Aya Kawashima and echoed by Stephen Long.
If HR doesn’t properly assign individuals to the correct sales compensation plans, it can lead to missteps in compensation and sales strategy implementation.
Aya explained, “We control the sales compensation plan mapping based on what job role this individual is mapped. And this job role mapping is done and owned by HR. When they hire the people and they don’t map the individual to the right job role, we could have a mismatch of the sales compensation plan assignment to this individual.”
Stephen offered a solution to this challenge through the CoE. Centralizing the creation and assignment of roles within the CoE, as Stephen did in his previous role, ensures a seamless alignment between job roles and corresponding sales compensation plans.
We have everything in the Sales Comp CoE… If they want to create a job or create a role, they had to come to me. There’s one advantage I can see of having it all together.Stephen Long
His approach involves creating or adjusting compensation plans concurrently with role definitions and recruitment processes. This integration not only streamlines role mapping but also guarantees that when individuals are hired, they are matched with the most suitable compensation plan, thus eliminating the errors and inefficiencies Aya referred to.
Eliminate Siloed GTM Strategies
Navigating the maze of local limitations, laws and varying practices in a global sales team can be daunting. The different geographies will roll out GTM motions at a different pace, especially seen in product launches that have regulations or constraints in some areas but not others. Another example is that some regions have laws that prevent lowering total compensation or base salaries, requiring the CoE to get creative about changing payment.
There’s a lot of cultural differences, legislation that needs to be overcome, costs that need to be overcome.Elizabeth Walgram
Despite the “slightly different pace” of plan adoption, Elizabeth believes it’s still crucial to launch the plan at the same time globally to send the unified message of the prioritized objectives. She has found that local cultural differences can often be harmonized through building relationships.
At Siemens, they established the role of liaisons for facilitating collaboration and communication between the CoE and local sales leaders.
We will have regular meetings with that individual to not only learn about what on the ground happens from a sales compensation perspective, but also to help disseminate information and do rollouts and so on.Elizabeth Walgram
For Aya, when a unique situation arises in one geography, they always bring in the worldwide sales leader of the relevant product specialist group to see how they can accommodate the unique situation while still adhering to the global strategy.
Everything is headed at this governance board and that’s how we are maintaining the global consistency and applying the same principle and philosophy to the plan design across different groups.Aya Kawashima
A CoE, serving as a governance board, can unify multinational teams in a powerful way, providing direction amidst the chaos and aligning global sales teams towards a common cause.
Eliminate Data Silos
According to the panelists, the real challenges are in data management and steering the colossal ship of change management, a problem felt closely by many enterprise organizations. The importance of cohesive data and analytics in driving better sales compensation practices cannot go unmentioned.
We have about 40 different financial systems so there’s just a lot of complexity in how and where the data flows. We didn’t have one place where all the information about plans is housed.Elizabeth Walgram
Elizabeth expressed that before the CoE, they wouldn’t always be able to answer questions about global comp plans due to data siloed by nation or geography.
Thankfully, A CoE can provide a single source of truth for your data. In fact, mastering data management is a crucial aspect of running a successful CoE.
With a central data management function and advanced analytics, local teams gain valuable insights to analyze targets and enhance their sales strategies.
Stephen’s team at Blue Yonder created a centralized data hub housing critical information about their plans. His rule about data: it must be automated.
Don’t give me metrics that we have to manually track because all I do is debate with reps and managers about that metric as opposed to the source system. The source of truth says this. So, if you have a problem with it, go talk to a person who owns the source of truth, but the data is correct based on what’s in that system.Stephen Long
Others are working their way toward a centralized data hub to benefit the various geographies.
“Hopefully in the coming fiscal year, we’re gonna be able to provide [data and analytics] as one of the big services of the CoE to local countries and verticals,” Elizabeth shared. “That way they could actually take a look at how well they set targets and provide them with different insights.”
CoEs, as a central source of data, serve as repositories of wisdom, helping the team understand the current state of affairs, plan metrics, and spot opportunities for growth. Offering data services to local regions also helps provide insights, enhancing the decision-making process.
Give Your Enterprise a Unified Edge
A Sales Compensation CoE can give global enterprise companies a unique and unified edge. Data management, change management, building relationships, and consistent communication clear the path for successful implementation of worldwide sales compensation programs.
Whether a Center of Excellence is right for your organization or not, these experts have shown that having a clear decision-maker for the governance of sales comp strategy and/or execution can eliminate silos throughout the enterprise, whether it’s to align GTM motions around the world, improve processes in hiring, and/or to better understand and act on data.
And every CoE needs a centralized hub where they can strategize and run their global sales comp operations.
Forma.ai is where every stakeholder can align on every data point and comp plan for their global sales comp strategy. Get a demo to see how Forma.ai brings sales comp design and execution together under one roof, alongside territory and quota management, to further eliminate silos in your enterprise org.