Before highlighting the benefits of sales compensation management, it is important to explain what sales compensation and its management actually is.
Sales compensation is the reward paid by an organization to its sales team members in return for their services. It is usually in the form of money but can include some non-monetary benefits. Companies give sales compensation to acknowledge employees’ efforts, motivate them, to promote desired behavior and to align their goals with the goals of their respective organizations.
Sales Compensation Management
Sales compensation management should be of extreme importance for companies because this is what attracts and retains sales people towards a company. Effective management of sales compensation should be one of the top priorities of all companies, no matter what products or services they are providing.
Benefits of sales compensation management
A company can enjoy a wide array of benefits by effective management of sales compensation which includes:
1. Prepare in advance
With effective sales compensation management a company keeps an eye on the market and adjusts its system accordingly. If a company has an efficient system of compensation management, it will not only keep the company updated with any new changes in the industry but also allow it to study and analyze the changes carefully before employing them in the company.
2. Strong relationship between the employer and employees
If sales compensation is efficiently managed and employees are being timely and adequately paid for their time and efforts, there will be a strong relationship between the employer and its employees. Good sales compensation management makes sure to provide frequent feedback to sales personnel and reward them for their work which develops and promotes desired behaviors among them. It also helps them align their goals with the company’s goals and targets. The result is a happy and satisfied team of sales workers and a successful, growing business.
3. Avoid ambiguities
Good sales compensation management keeps all the confusion and ambiguities at bay and ensures that the compensation plan is designed to reward employees for their hard work is simple yet clear. It should clearly state the services an employee is expected to provide, the targets to meet, and the rewards and benefits he/she will get for achieving the goals.
Complex policies and ambiguities or vagueness in the compensation plan lead to employee’s discomfort. If a person does not know or cannot calculate the compensation or amount of reward due to shadow accounting by the organization, he/she will get annoyed and dissatisfied with the company within a short time period, thus, making the employee retention less likely and difficult.
4. Low attrition rate
Studies have shown that there is a link between compensation plans and attrition rate. One of the major reasons why a person leaves a particular job is low compensation. If employees feel that they are not being compensated well and are not being properly rewarded for their efforts, then they tend to leave the company and join the one which is offering a higher compensation. Good compensation management will ensure that employees remain satisfied with the company which means there will be low attrition rate.
Happy and satisfied employees means more business. Ensuring efficient sales compensation management should be one of the foremost priorities of all organizations in order to ensure its growth. You can consult CallidusCloud to get certain software and services which will ensure professional sales compensation management for your company.