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Tom's Talent Blog

3 Points To Designing a Staffing Sales Variable Compensation Plan

Posted by Tom Erb on Feb 16, 2016 3:07:34 PM

Sales_growth-101103-edited.jpgCompensating salespeople effectively is one of the biggest management challenges for a growing business. When a well-designed variable compensation plan is implemented it can have an enormous impact on the bottom line and future growth of your business. When developing your compensation plan for your sales professional, always consider what you want it to do. Here are 3 initial points to consider when designing your staffing sales variable compensation plan.

1.  Motivate to Win, Retain, and/or Grow Clients

Depending on the role of the sales person, the comp plan should motivate sales reps to win, retain, and grow clients. For example, comp plans for a pure hunter role (only responsible for bringing in new business) should incent them to win new business, not retain and grow existing clients. The opposite is true for an Account Manager managing clients, as a comp plan for this position would earn a higher commission for growing existing clients.

2.  Bring in the Right Business

The comp plan should incent sales reps to bring in the right business and reward the desired behaviors. Therefore, it is critical for your compensation plan to be aligned with your company objectives. If your company’s goal is to increase your gross profit margins, then your sales reps shouldn’t be compensated on revenue. Do you want your sales rep to focus on temp, perm, or both? Are you focusing on skill sets and industries in your strategic niche or building a business mix? Answer these questions first before structuring your variable comp plan.

3.  Attract and Retain Top-level Sales Talent

The comp plan needs to attract talent, therefore you need to understand your market rates for the level and expectations of the position. Benchmark your variable compensation plan to your competitors. The American Staffing Association (ASA) publishes a salary survey which is specific to the staffing industry. You may also look into your local ASA chapter for resources. To retain A-players, you need to evaluate your plan regularly, particularly when you update your business plan for the new year. Ensure your sales variable compensation plan is still in alignment to motivate and bring in the right business.

 

Looking for a way to  take the guesswork out of goal setting for sales reps? Then download our free sales tool, the Sales Goals Worksheet.
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Topics: Sales, Strategic, Compensation