Best Practices for Communicating Your Sales Compensation Plan

Leo Rocha is the Head of Incentive Design & Governance at Moody’s Analytics, a leading provider of financial intelligence and analytical tools supporting customer growth, efficiency and risk management objectives. Before his current role, he was the Senior Director of Sales Incentive Compensation at Equifax and served as the Head of Global Sales Incentives at IBM, demonstrating his expertise in driving sales performance on a global scale.

With a remarkable fifteen years of experience, Leo is a seasoned incentive compensation leader with a passion for understanding the impact of incentives on human behavior, recognizing their potential as powerful catalysts for both individual and business success.

In a conversation with Nabeil Alazzam, Leo explores the best practices for communicating your sales compensation plan and the importance of securing buy-in from key stakeholders in the organization. He also provides his insights on aligning sales compensation with the company’s strategic objectives.

Listen to this episode of The Sales Compensation Show to learn:

  • Why you should prioritize your sales compensation communication process
  • Why you need key stakeholders to support your sales compensation plan
  • Why it’s critical to involve your sales compensation team in strategic discussions

Three key takeaways:

#1: Prioritize your sales compensation communication process

Even the best sales compensation plans will fail if they are not communicated effectively. While many organizations do a decent job at communicating the plan to their sales teams, very few do it exceptionally well because they often view sales compensation as a fixed, unchanging process.

"The three C’s of sales compensation are: communication, communication, and communication." - Leo Rocha, Moody's Analytics

However, the reality is that sales compensation is far from static. Sales compensation programs are in a constant state of evolution from turnover among sales reps, shifts in territories, the introduction of new products, and changes in market conditions. Plans must continually be adjusted as salespeople work on deals and unforeseen circumstances arise.

To achieve a best-in-class operational state, prioritize your sales compensation communication process and approach it as an ever-evolving feedback loop.

#2: Have the executive team support your sales compensation plan

Securing the support of the executive team for your sales compensation plan is not just a matter of convenience; it is essential for the plan’s success and the overall health of your organization.

The executive team serves as the bridge between your strategic goals and the day-to-day operations of the company. Their support signals to the rest of the organization that the sales compensation plan is aligned with the company’s broader objectives. This alignment is critical to ensure that the sales team’s efforts are channelled towards activities that directly contribute to the company’s growth and profitability.

"You have to have buy-in. Make sure you have the right folks on your side because they will be your champions." - Leo Rocha, Moody's Analytics

Moreover, the executive team’s endorsement adds a layer of credibility and authority to the sales compensation plan. Their buy-in communicates to the sales team that the plan has been evaluated, aligned with the company’s vision, and designed to drive success. This, in turn, boosts morale and motivation among the sales force, as they feel their efforts are recognized by top leadership.

Additionally, this support fosters a sense of unity and purpose within the organization, as everyone understands the shared objectives and recognizes the role sales compensation plays in achieving them.

#3: Involve your sales compensation team in strategic discussions

Sales compensation plays an important role in driving a company’s growth. It directly influences sales motivation, performance, and alignment with strategic objectives. Your team should be involved in high level discussions for several reasons:

Firstly, they have a deep understanding of your organization’s sales structure and performance metrics, making them valuable contributors to the development and refinement of sales strategies. Their insights into which comp plans drive desired behaviors and outcomes are essential for aligning sales objectives with broader business goals.

Secondly, the sales compensation team can provide critical input on the financial implications of strategic decisions. They can assess how proposed changes in strategy, product offerings, or market expansion may impact the budget allocated for sales commissions and incentives, ensuring that the company remains financially sustainable.

Furthermore, including the sales compensation team fosters collaboration and buy-in from the salesforce. When salespeople perceive their compensation plans as aligned with the company’s strategic direction, they are more motivated and committed to achieving those strategic goals.

The Sales Compensation Show is brought to you by, the world’s first sales compensation platform designed around the agile methodology of CompOps. Find us by searching “sales compensation” on Apple Podcasts, Spotify, YouTube, and other streaming services.

To learn more about how can help design, execute, and optimize your sales compensation strategy, start a conversation with us today.

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