This document discusses how to create an effective sales compensation plan that motivates employees in 3 key ways: 1. It should reward top performers appropriately while attracting and retaining top talent and encouraging poor performers to leave. This instills consistency in how salespeople are paid. 2. The plan should be easy to understand, administer, and align compensation with effort, productivity and results in order to increase sales and profits. 3. When developing the plan, companies should consider both internal equity between positions and external market rates to ensure compensation is fair. This includes conducting job analysis, evaluation and pricing.

1. sales compensation plan that will help:
Reduce turnover.
Motivate your sales force.
Avoid paying out too much or too little to your sales people.
Instill consistency in how sales people are paid.
Reward top performers appropriately.
Make your sales people work harder and smarter.
Attract and retain top sales talent and encourage poor performers to leave.
Improve overall job satisfaction among your sales force.
Elevate performance of your sales staff.
Align compensation appropriately with effort, productivity and results.
Increase sales and profits.
Put in place a plan that is easy to understand and easy to administer.
Whether you are building a straight sales commission plan or one that includes multiple components,
Developing a sales compensation plan that works for both your business and your sales force is easier than it
may seem. Yet many plans in use today are simply not effective and are actually de-motivating for the sales
staff.
Far too many sales compensation plans actually over compensate sales representatives causing an unnecessary
erosion of profit. Still others take an overly conservative approach which leads to frustration, low morale, and
high turnover. Avoid making these mistakes!
The Sales Compensation Is A Must For:
Sales managers and executives interested in developing a more effective sales compensation plan.
Business owners and entrepreneurs who are building their sales staff and need an excellent sales
compensation plan.
Sales people who are looking for direction on what effective sales compensation plans look like.
Anyone needing to develop a sales compensation or sales commission plan that works well for both the
business and the sales staff.
As part of SuccessFactors BizX Suite, compensation professionals benefit from more accurate budgeting and
reduced risk — but that’s just the beginning. With SuccessFactors, compensation professionals are assured that
rewards are not just calculated correctly, but fairly — to help retain top performers. Plus, compensation data can
be combined with additional business data for comprehensive compensation insight. SuccessFactors
Compensation delivers and ensures:
Simplified, more accurate compensation management. Intuitive, highly configurable base salary and
variable pay (bonus, stock, equity) processes with defined, streamlined workflows.
Calibration with Performance to ensure fairness and employee retention. Integrated with the BizX
suite, performance data is calibrated across the company and seamlessly used with SuccessFactors
Compensation.
Insight for total compensation analysis. Pre-built reports and dashboards for budget rollups,
exceptions, legal compliance, employee details and perform-and-reward analysis. Plus, compensation
data can be combined with other business data for more comprehensive insight.
Assurance that budgets are used wisely. Automated monitoring of compliance with variable pay
guidelines, keeps payouts in line with budgets. Plus, save time as bonus and merit recommendations are
automated from employee performance data. Run "what-if" scenarios to instantly see how increasing
merit pay to top perfomers will impact budgets.
Significantly reduced risk with improved audit compliance. Data for audits is automatically stored,
greatly reducing this burden for compensation administrators.

2. By rewarding great execution, you will retain more of your top talent and drive organizational performance that
exceeds all expectations. Plus, benefit from improved budgeting accuracy and reduced risk. With
SuccessFactors Compensation, it all adds up to better business execution.
How to Create a Compensation Plan that Motivates Employees
Employers that want to succeed in this increasingly competitive environment must have a well-designed
compensation plan that motivates employees, controls compensation costs, and ensures equity. The best
compensation plans mirror the culture of the employer. Therefore, employers should establish a compensation
philosophy. Benefits programs should also be part of an employer’s compensation strategy.
Employers have myriad options when it comes to designing a compensation plan, and they must consider and
how it will fit into their overall strategy for recruiting and retaining employees. Many employers base their
decisions on the market—that is, they look at salary surveys to see what other employers are paying (external
equity). Once they access the market data, they set their wages and salaries at some point above, below, or equal
to the market data depending on the circumstances. For example, some employers decide that they will set
wages for certain positions at well above the market rate to attract and retain highly valuable employees.
However, employers should also consider internal equity—that is, whether their compensation plan reflects how
much they value positions in relation to other positions within the organization.
To ensure both internal and external equity, employers must establish an effective compensation administration
program. To do this, employers must conduct:
Job analysis (thoroughly analyze and describe each job within the organization)
Job evaluation (determine what jobs are worth on an absolute basis and relative to other jobs in the
organization, such as giving jobs that are of greater value to the organization a higher labor grade)
Job pricing (establish rate ranges; that is, minimum, midpoint, and maximum dollar values for each
labor grade)
A growing number of employers are incorporating performance-based compensation plans to boost productivity
and maximize their return on investment in compensation. These types of plans are designed to reward
employees who produce. Some experts argue that traditional salary increases aren’t as connected to
performance as they should be. By contrast, a well thought out performance-based bonus plan can be tied
directly to the results the company sees as valuable. However, developing a performance-based compensation
plan isn’t easy. One mistake employers often make is setting performance targets too low. Another common
mistake is for employers to use the wrong metrics in determining an employee’s performance.