With a current economic outlook potentially fluctuating and inflation on the rise, giving your company’s sales team the best opportunity to perform despite the market conditions is crucial – while at the same time keeping compensation costs under control so you can stay financially stable. So, how can you do both?
Show me the money Secondly, a data-driven approach which regularly analyses compensation levels relative to market data and industry norms is the key to having a compensation structure that is competitive while also being cost-effective. New compensation software and analytics tools are available that can give real-time insights into paying practices, and can even allow for initial adjustments to be quickly made in the face of economic change and innovation.
Secondly, you can use realigned compensation packages to ensure that the sales incentives are calibrated to match overall organisation performance whilst maintaining fixed costs by incorporating performance-based bonuses and commissions into structured sustainable compensation packages. This can motivate your sales teams to hit and exceed their targets whilst ensuring they are rewarded based on meeting these. This not only incentivises sales teams to deliver high-performance but also allows you to manage fixed salary expenses.
One example is cost-of-living adjustments (COLAs). Including a mechanism in compensation plans for starting pay packages and for adjustments to base pay over time allows companies to keep up with inflation. Periodically reviewing and increasing base pay lets sales professionals feel that a company values enough to maintain their purchasing power. This way companies can avoid a skills drain when the market significantly improves. While this is generally a pandemic-related phenomenon, it is more widespread than expected. Some companies view this as normal market forces. They believe that while there may be short-term challenges, once the pandemic subsides, conditions will quickly return to some semblance believe in ethical conduct, they must recognise that waiting six months until the pandemic’s end to make changes may result in reaching out to candidates who have already made choices for working conditions that better balance long hours on the road with time spent with their loved ones, including their children.
Non-monetary rewards can do much to control your cost of compensation while at the same time keeping your sales organisation upbeat. Recognition programmes, opportunities for career development and flexible working arrangements all have the power to reduce staff turnover and improve loyalty. Properly managed, they can make your organisation an attractive place to work, with people deriving deep satisfaction from their employment.
By providing regular and honest communication about the company’s financial standing and the reasons behind compensation design choices, companies can enhance the efficacy of compensation management and improve the efficiency with which these processes are carried out. Furthermore, by giving employees the opportunity to take part in discussions about compensation policies and solicit their feedback, the decision-making process becomes less prone to conflicts and more likely to result in accepted and effective compensation policies.
Finally, scenario planning and financial modelling help organisations to navigate economic uncertainties. Organisations can forecast the different economic scenarios their businesses may be subject to and address potential adjustments to compensation costs in advance. To sum up, controlling the cost of compensation during times of economic volatility, with mounting inflation, will require a creative and multi-dimensional approach to talent management. Based on data available, flexible compensation structures, nudges for cost-of-living adjustments, non-monetary rewards, appropriate transparency and contingency planning will help companies deliver competitive, motivating incentives to sustain a successful and sustainable sales team, and profitable business over the long run.
