Many companies are reviewing how they incentivize their sales force.  In an economy strife with decreased expenditures, looming lay offs, and questionable economic stability, companies are asking, 'How do I incent my sales people and what is my basis for incenting them in this economy?'

Have you asked yourself that question?  Have you wondered whether your current incentive compensation plans work?  Do you wonder if there is a better way?  You are not alone.

With decreased sales, many companies are downsizing the sales force, and changing compensation plans to allow for decreased sales.  This may include changing the targets or quotas assigned to the sales force.  The expectation of a smaller sales force managing a larger territory.  The flexibility to model these changes prior to making them, may be the key to making educated decision versus 'knee jerk' reactions to the market.  

Many companies have been moving away from incenting on sales to margin or net sales.  Some even going further to incent on collected versus billed or invoiced amounts.  Organizations are looking harder to not only incentivize their sales force but to also protect and maximize their profit margins. This means reviewing metrics that include net to gross sales, margin to income, and incentive expense to net income. Do you know the impact of your incentive compensation to your bottom line financial statements, and is it what you expect?

If you and your company are in the process of reacting to the market, share your thoughts with me and our fellow readers.  I'd like to hear what you have to say.  Your questions are welcome, too.  We can put our heads together and discuss options, ideas, and strategies.

This is a troublesome time, but it is also a time of incredible opportunity.