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HR Magazine - February 2002: Fundamentals of Sales Comp Plans

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HR Magazine, February 2002

Vol. 47, No. 2

Should You Adjust Your Sales Compensation?

A solid compensation plan:

  • Creates a beneficial relationship for both the company and the employee.

  • Can expand and contract, depending on economic conditions.

  • Focuses on increasing profit, not just revenue. This is a slight difference that is sometimes difficult to measure but much more advantageous to the company.

A poor compensation plan may have the following problems:

  • Inflexibility/inaccuracy in quota setting.
  • Quotas that are inconsistent with company goals.

  • The absence of a clause allowing the company to make changes or to respond to exceptional events.

A poorly designed pay plan causes salespeople to focus on the wrong things or causes them to stop selling completelyeither because they have surpassed their goals or have no realistic chance of attaining them.

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