The Carrot

Back to Basics: Two simple reasons to use an incentive compensation management solution

Posted by Steve Marley on Thu, Nov, 20, 2014

I was working with one of our software partners to describe the benefits of an Incentive Compensation Management (ICM) solution to a company that was interested in purchasing. After articulating the benefits of an automated software solution to help with the processing of performance, payouts, and reports, the company asked one simple question: How much money will it save us? Discussions stalled at that point.

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Topics: sales compensation, ZS Associates, Incentive plan design, Incentive compensation, incentive compensation management (ICM), ZS, Steve Marley, compensation administration

Would Sales leaders like MBOs more if we changed the name?

Posted by Mike Martin on Tue, Nov, 18, 2014

A couple times on this ZS blog I have written about Management by Objectives (MBOs), such as how to improve them by focusing on quality over quantity and using the IMPACT framework to create more impactful objectives.  However, I still find that the name “MBO” carries a lot of baggage.

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Topics: sales compensation, ZS Associates, Management by Objective, MBO, Incentive compensation, Sales Bonus, goal setting, ZS, Mike Martin

Back to Basics: How to Set Good Sales Quotas

Posted by Chad Albrecht on Tue, Oct, 21, 2014

In prior Back to Basics blog posts, we have walked through how to establish pay levels, pay mix, and the incentive plan design. But many plan designs are tied to performance vs. sales quotas and, as any salesperson will tell you, the plan design is only as good as the quota that goes with it.

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Topics: sales compensation, sales quotas, ZS Associates, Incentive plan design, Incentive compensation, ZS, Chad Albrecht, back to basics, quota settings

Back to Basics: Four Ways to Maximize Your Use of SPIFs and Contests

Posted by Steve Marley on Thu, Oct, 09, 2014

In a previous blog in this series, Chad wrote about sales compensation plan periods and noted that the majority of companies follow an annual performance period. I look at annual performance periods as akin to a long race, whether it’s a 5K run or the Indy 500.

Unlike shorter races – such as 100m or 200m dashes or an automotive drag race where you go full speed for a brief duration – longer races require strategy: when to pass, when to conserve energy, when to work with someone for mutual benefit or when to take a break (like a pit stop).

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Topics: sales compensation plan, sales compensation, ZS Associates, Incentive plan design, Incentive compensation, ZS, Steve Marley, SPIFs, sales contents, sales performance incentive funds

Back to Basics: Incentive Compensation Plan Periods and Payout Frequency

Posted by Chad Albrecht on Thu, Oct, 02, 2014

The majority of companies follow an annual incentive plan period for salespeople.  This is likely for multiple reasons.  First, executive compensation and broad-based compensation programs – two additional categories of compensation programs – are almost always annual.  For consistency, companies place salespeople on annual plans, as well.  Second, most companies have an annual business planning process and annual incentive compensation plans and goals tie in nicely with this planning process.

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Topics: sales compensation, sales quotas, ZS Associates, Incentive plan design, Incentive compensation, Sales Bonus, performance incentives, ZS, Inside Sales, Chad Albrecht, compensation administration

Back to Basics: Adding Accelerators or Decelerators to Your Incentive Compensation Plan’s Payout Formula

Posted by Mike Martin on Mon, Sep, 29, 2014

In the prior blog post, we described how to design your incentive compensation plan’s payout formula, and we briefly mentioned the concepts of accelerators and decelerators.  At a high level, accelerators are used to encourage increased performance and decelerators are used to safeguard against significant overpayments. 

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Topics: sales compensation, ZS Associates, Incentive compensation, goal setting, ZS, Mike Martin, pay-for-performance, sales quota, back to basics, accelerators, decelerators

Back to Basics: Calculating Your Incentive Compensation Plan’s Payout Formula

Posted by Chad Albrecht on Tue, Sep, 16, 2014

In the last 2 blog posts, we discussed metrics to include in the incentive compensation plan and the plan types that you should use. Now, we turn to the actual calculation of the payout amount.

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Topics: sales compensation, sales quotas, ZS Associates, Incentive compensation, performance incentives, goal setting, ZS, pay-for-performance, Chad Albrecht, sales commission

Back to Basics – Choosing a Sales Compensation Plan Type

Posted by Mike Martin on Fri, Sep, 12, 2014

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Topics: sales compensation, ZS Associates, Incentive compensation, Sales Bonus, goal setting, ZS, Mike Martin, pay-for-performance, sales commission, sales ranking, Management by Objectives (MBOs)

Back to Basics: Three Criteria to Select Your Incentive Compensation Plan Metrics

Posted by Chad Albrecht on Tue, Sep, 02, 2014

In the first 2 “Back to Basics” blogs, we covered the basics of getting your guiding principles in place and determining the appropriate pay levels and mix.

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Topics: sales compensation, ZS Associates, Incentive plan design, Incentive compensation, goal setting, ZS, incentive plan, pay-for-performance, Chad Albrecht, guiding principles

Back to Basics: Ideal Pay Level and Mix for Your Incentive Plan

Posted by Chad Albrecht on Wed, Aug, 27, 2014

In the first “Back to Basics” blog, we covered incentive compensation plan eligibility and guiding principles. In this blog, we want to turn to targeted pay level and mix.  By “target” pay level, we mean the pay level that the “average” salesperson will earn for achieving expectations (often 100% of sales quota) in a given year.  When we say “target” mix, we mean the way that total pay is delivered – either in base salary or in incentive pay.  The mix is normally stated as a ratio, first with the percent base salary, and then the percent incentive.  For example, if a job with a target pay level of $100,000 has $70,000 of that delivered in base salary, we would say that the pay mix is 70:30.

Step one in establishing a targeted pay level and mix is finding good market sales compensation data.  For some industries, such as technology and pharmaceuticals, there are industry-specific studies that cover the vast majority of roles.  For other industries, you may need to turn to a broader, all-industry survey such as those conducted by the HR houses. 

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Topics: sales compensation, ZS Associates, Incentive compensation, performance incentives, ZS, incentive plan, Chad Albrecht, sales quota, target pay level, target mix, targeted pay level, back to basics

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