Employee turnover is part of doing business in sales, and when a salesperson leaves or is fired, your sales incentive plans need to be adjusted in a way that responds to the change of circumstances and still maintains fairness by keeping the team on track.
1. Analyse the lost revenue stream:
First things first, look at the revenue stream: How much will you lose when the salesperson is no longer working with the company? For instance, if a top-performing sales person departs, and if he or she was accountable for 20 per cent of a region’s revenue, do something to redistribute those accounts immediately. At the same time, make corresponding changes to the incentive plan of the person whose accounts are being redistributed. The targets might go up and so will the associated potential rewards, to make sure the person will be motivated to handle the additional workload.
2. Revise quotas and targets mid-cycle:
If salespeople leave mid-quota or mid-year, their quota will usually never be achieved. You should prorate their incentive targets based on how much they were in the incentive period. For example, if a sales person with a $1.2 million annual target leaves at the end of the first quarter, you can revise that number to $300,0 $900,000 should be divided up among those who remain. Revised targets should be balanced and achievable, and you have to decide what amount of pressure you’re willing to put on remaining salespeople.
3. Recalibrate Team Incentives:
Where a team has its own incentive plan, the departing team member can derail the whole construct. For example, if a team was on track together to achieve a $10 million revenue target for the year, and they lose a key member or members, the organisation might have to lower the team target amount or adjust the bonus plan shapes for the period affected. Or, the team might be offered a reduced bonus for the period affected by the departure and a recalibrated target for the remainder of the bonus plan cycle.
4. Communicate Clearly and Openly:
Lastly, be clear and transparent: explain to the team why you are making these adjustments and how it will affect their ability to earn money. This transparency will help to ensure that any remaining team members stay focused on their goals.
In summary, revisions of the incentive plan upon a departure or termination should, ideally, target fairness, motivate contributions to the team and, most importantly, achieve the strategic redirection of work and responsibilities. By doing this, organisations would likely maintain morale and momentum when recruiting new members into the sales team.
