Sales compensation structures should be straightforward and above board to avoid risk, but they must also continue to provide the right incentives to win business and protect margins as organisations grow and expand territories.
1. Create Large-Scale Policies
A fundamental element of governance and compliance is having well-defined and documented compensation policies, such as which commissions, bonuses and other sales incentives are earned when. For example, a financial services company might adopt a policy that gives an employee a bonus based on both individual performance and long-term satisfaction of customers as a way of discouraging high-pressure sales pitches that might encourage compliance violations.
2. Timed and Systematic Compliance Audits
As regulations change frequently, these audits increase the likelihood that potential compensation violations are not just identified but proactively avoided. For example, a global tech firm could schedule quarterly reviews to ensure that sales commissions are mathematically accurate and optimally compensated according to the law of the respective country or region.
3. Go for Ongoing Training
Organisational sales teams and managers must have on-going training programmes. This includes carving out internal time for compliance professionals to disseminate the most recent regulatory changes, whether the issue relates to reporting accuracy or whether better ethical practices are required. For instance, a pharma company could offer an annual compliance training program for its sales representatives, with a focus on the ethical implications of publicising product offerings in increasingly regulated markets.
4. Promote transparent calculation
With a compensation management system, sales incentives can be computed and disbursed accurately and expeditiously. A big retail chain with numerous branches could use such an application to track and monitor sales performance in real-time and automatically adjust incentives to ensure compliance with its own internal policies and other external regulations.
Doing this in a contemplative manner – integrating the new thinking styles discussed here – should allow organisations to implement better compliance and governance within sales compensation plan. In turn, this will help to build a culture of integrity and speak to the long-term sustainability of an organisation.
