Change is hard. It’s so hard that distributors will often stay the course even when they know it’s not taking them in the right direction. The sales compensation plan set in stone may be so outdated and inconsistent that real growth is basically impossible. You may think, what if changing it causes top performers to leave?
The truth is that a sales compensation overhaul, when done correctly, can motivate reps to align their work with company goals and drive more revenue as a result. It does have some risk attached, and it will take some planning and effort, but the alternative – standing pat – offers nothing but downside. The way distributors are doing business is changing and inside and outside sales roles are blurring. This necessitates a hard look at your current compensation plans. Assume that your competitors are looking for every possible edge, and a fully modernized compensation plan offers one of the best edges available.
Recently, I helped a major distributor take a dozen compensation plans cobbled together from various acquisitions and transform them into a consistent, modern compensation structure, all without losing a single rep.
Here are five key tactics we learned from the process:
1. Fear is natural, but it can be overcome.
Company leadership knew having so many plans was untenable, but they were worried that half of their 130 sales reps might jump ship. Compensation changes are often met with skepticism by reps who assume that change results in lower earnings. That’s a valid fear. But with a proper strategy and communication plan in place, those fears can be eased.
2. Change management is crucial.
A sales compensation overhaul requires planning, patience, and clear communication. In this case, the company gave itself more than a year of runway to develop and implement their new plan. Rather than rushing into a major change and imposing it on the sales team, they took the time to test and refine their new plan, involving stakeholders from across the company as early and often as possible. Sales leaders, HR specialists, data analysts, finance and payroll experts gave their input to ensure that the new plan would be airtight in all aspects.
The sales team itself was also involved very early on, as leadership interviewed a dozen key reps to better understand both the frustrating and popular elements of the existing plans. They also discussed areas where compensation and sales behaviors were misaligned. With the team’s input heard and considered, leadership began developing the new plan and communicated the oncoming changes to the reps — no surprises.
3. Data-driven transparency is a must.
There’s a big difference between “trust us” and cold hard data. The team and I worked with company leadership to create real-time commission dashboards and provide reps with self-service access to commission reports with every detail of their earnings, including invoice-level data. This, along with side-by-side comparisons of the old and new plans, helped the reps visualize and understand the benefits of the changes. The elimination of manual commission tracking also saved over 1,000 hours in administrative time, a huge cost-saving benefit. Ultimately, transparency is the greatest weapon against skepticism.
4. Incentives need to align with business goals.
Of course, it’s easier to be transparent when the plan itself is strong. This company wisely built a compensation structure that didn’t penalize reps, but rather incentivized desired sales behaviors. With performance targets and rewards clearly defined, every rep got a boost. Those in need of improvement were motivated to grow, while the high-performing reps, that leadership worried about losing, quickly found that they could earn the same or more under the new plan. This change was an opportunity to create a strong link between individual performance and broader business objectives, and the company took full advantage.
5. Slow and steady wins the rollout.
The company comprehensively trained its managers on the new plan before introducing it to the broader sales team three months before implementation. This time span allowed managers to support and reassure their teams. Reps also had enough time and information to prepare for the shift, including tools to model their earnings under the new plan.
The transition to the new compensation plan was so well-executed that not a single sales rep left — despite initial fears of losing around 60. This shows how easily fear can distort reality. It’s clear that change itself is not the culprit when it comes to attrition — it’s mismanaged change. With thorough planning, clear communication, and a thoughtful rollout, change becomes far more manageable.
Now is the time to launch a strategic, employee-focused compensation plan that makes your reps feel valued and motivated. Waiting only risks looking back with regret that hesitation got in the way.
Mike Emerson, Managing Partner at Indian River Consulting Group, has worked with hundreds of distributors and manufacturers of all sizes on sales strategy, structure and compensation. Contact Mike at www.ircg.com.
