Be Proactive about Go-to-Market Compensation Planning
By Joi Pentin, Senior Associate at WestCap
With 2024 around the corner, many companies are in the thick of nailing down budgets, headcount and operational models. Too often, Revenue Operations leaders put go-to-market incentive compensation planning — which spans sales, customer success and technical account management teams — on the back burner.
But putting this process off until the end of the year, or the start of the following one, can take a toll. Plans lack the richness, balance and competitive edge needed to drive success and retention. Team members in the field lack clarity on what they should prioritize and how they’re going to be compensated, which can leave them feeling frustrated, unmotivated or perhaps even tempted to leave. Starting early — 12 to 15 weeks before the end of the fiscal year, for most companies — allows Revenue Operations leaders to design compensation structures that align with business objectives, drive the right behaviors in the field, and ensure a fair and competitive package that retains top talent.
Five Steps To Effective Incentive Compensation Planning
Here are the steps Revenue Operations leaders can take to succeed with incentive compensation planning:
1. Reflect on the past
The best plans start with an honest and thorough look in the rear-view mirror. Dive into historical data to understand how current incentive plans have performed, including what percent of the field is on track to hit quotas and which teams are underperforming. Consider whether the components intended to drive certain actions (e.g., a higher commission for selling new product lines) are actually encouraging those behaviors. And think about feedback you’ve received from the field: Did reps feel anything was unfair? Also examine whether components you considered last year but didn’t include, perhaps due to timing and approval processes, might have strengthened performance. Reflecting on what worked and what didn’t is crucial for identifying elements that effectively motivate your teams and areas for improvement, all of which will inform plan design for the coming year.
2. Lay the foundation
Once you know which current plan components to keep or revisit, it’s time to start the initial planning process. Remember that the purpose of incentive compensation planning is twofold: to make your employees feel valued and confident in their ability to succeed, and to incentivize behaviors that fulfill company objectives. Based on lessons from last year and conversations with leaders about upcoming targets and objectives, start drafting a blueprint for next year’s compensation structures. Try to keep plans simple and consistent, since complexity creates administrative challenges. You can always include monthly or quarterly spiffs if specific needs arise.
3. Get feedback from stakeholders
Meet with team leaders across the organization — from HR to finance to sales — to gather input, align expectations and refine compensation plans. Create a central document that notes year-over-year changes, explains the reasoning behind them and tracks the status of approvals. This will serve as a single source of truth, guiding productive discussions and keeping everyone organized. To avoid the end-of-year rush, let stakeholders know early on what the process for approval looks like, what you will need from them and who is responsible. Continue to refine components based on feedback, scheduling ad hoc meetings and reviews as necessary to keep the process moving forward.
