Hosted by Aon Hewitt November 2, 2012

Greater Chicago Sales Operations Forum—The Future of Sales Management and What It Means for Plan Designs

Hosted by Aon Hewitt

November 2, 2012

Prepared by ConsultingPerformance, Reward, & TalentSales Force Effectiveness

Consulting | Global Compensation & TalentProprietary & Confidential | AA/SF/GCSOF.PPT/LS-11581 02/2012 2

Reminder: Why Are We Here?

“Sales operations” as a hybrid function—no professional association or natural networking groups, no common language of what “sales operations” does or does not include.

– Ownership of sales operations as an organizational competency resides in different functions from company to company.

As a result, companies find it difficult to connect with other companies facing similar sales operations and effectiveness challenges.

The Greater Chicago Sales Operations Forum intends to create a community of interest that can:

– Serve as a resource for companies in identifying functional best practices; and

– Foster business relationships through networking opportunities.


Topics Covered in Previous Sessions

Session and Date Topic(s) Host and Location

#1: May 20, 2009 Current State of “Sales Operations” Identifying Benchmarks and Best Practices Forum Planning: Where Do We Go Next?

CDW, Vernon Hills

#2: October 20, 2009 Quota-setting Approaches and Best Practices

Aon Hewitt, O’Hare Hyatt

#3: May 20, 2010 Measuring Sales Effectiveness: Key Metrics

Omron Electronics, Schaumburg

#4: September 15, 2010 Sales Compensation Design Theory and Trends

General Growth Properties, Chicago

#5: January 26, 2011 Best Practices in Sales Compensation Governance

Incentive Compensation Administration Technology Tools

Walgreen Co., Deerfield

#6: April 20, 2011 “Other” Sales Incentive Methods (LTIs, Sales Recognition)

Member Open Forum

American Hotel Register, Vernon Hills


Topics Covered in Previous Sessions

Session and Date Topic(s) Host and Location

#7: September 20, 2011 Why and How “Moving the Middle” Is Important

Crown Imports, Chicago

#8: February 2, 2012 Concepts for Developing a Total Rewards Strategy for Sales Roles

Tellabs, Naperville

#9: June 13, 2012 Measuring Sales Compensation ROI and How to Manager "Hunters" versus "Farmers"

Discover Financial Services, Riverwoods


Session Agenda

Time Topic

8:30 a.m.– 9:15 a.m. Welcome and introductions

9:15 a.m.– 10:30 a.m. Background: frameworks for improving sales performance Six key trends impacting sales performance, including the evolving

role and impact of the Front-line Sales Manager

10:30 a.m.–10:45 a.m. Break

10:45 a.m.–11:45 a.m. How high-performing companies have structured and nurtured this role

Implications for sales and sales management incentive design

11:45 a.m.–12:00 p.m. Forum next steps: dates, topics, location

12:00 p.m.–1:00 p.m. Networking lunch


(Re) Introductions

Name Company Current role What issues or business processes are occupying your time this week? How is your company doing this year relative to its goals? What manager-related issues would you like addressed during today’s session?


Background: Frameworks for Improving Sales Performance


“Performance”100%

Shifting the performance curve to the right!

What is Everyone Trying to Accomplish by Improving the Effectiveness of Their Sales Efforts?


Best Practice for a Highly Motivated, High-performing Sales Effort is for 60%–70% of Sales People to Achieve Goal

Quota Performance

Threshold 100%

Number of Salespeople

Excellence

Top 10% of Sellers

Bottom 10% of Sellers

30%–40% of salespeople

60%–70% of salespeople


The Most Common Approach: Quick Fixes Short-terms changes with no sustainable improvement

Cost of Sales

Turnover

Win Rates

Training

Compensation

The sales leader’s ‘whack a mole’ life—fix one problem, another pops up

Does this sound familiar?

– Individual issue pops up

– It’s addressed quickly to limit disruption

– Only to be followed by another issue that requires immediate attention

– And another…

What you miss by dealing with issues separately:

– An understanding of how they connect to each other and to the overall sales system

Segmentation

Consulting | Global Compensation & TalentProprietary & Confidential | AA/SF/GCSOF.PPT/LS-11581 02/2012 11Consulting | Talent & RewardsProprietary & Confidential | 15010/OV001RB.PPT/LS-11581 08/2011 11

Aon Hewitt’s Sales Performance Model

Performance and Rewards

Selling and Service Model Job Roles and Structure Deployment Planning Enablement through

Support Infrastructure Assessments Recruiting and Selection Career Paths Training and Development Leadership &

Management Process

Performance Management Quotas and Measurement Compensation and

Recognition

Talent Management

Organization Design

Creating a sales structure that is effective in meeting customer needs in an efficient manner

Ensuring the availability of the right talent for the right role at the right time

Maximizing the productivity of an engaged sales force to exceed business goals

Aon Hewitt Sales Performance Model

AlignSales Force

Realize Business Impact

Customer Insight & Segmentation

Business Strategies

Value Proposition

Competitive Dynamics

Understand Business Drivers


Performance Drivers

• Compensation

• Recruiting and Selection

• Segmentation

• Methodology, Playbooks

• Account Strategies / Planning

• Training and On-boarding

• Communication

• Technology

• Sales and Sales Management Processes

• Organization Structure

• Role Profiles

Customer Acquisition

Cross-Selling

Up-selling &

Expansion

Customer Churn

Beginning of Year

Revenue

End of Year

Revenue

2011

2012

- +

+ +

=

Retention New Sales Base Business Net Growth

Price Increases+

Customer Scale-Back-

Elements of Sales Growth


6 Key Trends Impacting Sales Performance


Key Trends in Today’s Sales Organizations

1. Focusing on profitable growth—no longer just focusing on any kind of growth

2. Managing costs—continued focus on costs and efficiencies across the sales model

3. Refining segmentation models—not just the size of the company, but also the industry, account potential, etc.

4. Consultative vs. transactional selling—companies are looking beyond the product itself, seeing a greater understanding of the entire "solution" and how it will help them be more profitable

5. Channels gaining prominence in sales strategies

6. Evolving role and impact of the front-line sales manager


Trend #1—Focusing on Profitable Growth

More and more companies are emphasizing profitable growth, not just growth for growth’s sake.

Some companies are reallocating sales resources to their highest long-term potentially profitable clients and migrating less profitable, smaller clients to alternative, less expensive sales channels to address the profitable growth objective

Some firms are re-emphasizing business acumen and client industry knowledge competency requirements for their current and future Global, Strategic, or Key Account Managers based on the belief and experience that client’s expect those characteristics from their business partners

Impact on Sales Management Process/Focus Addition of profitability components to key sales metrics and compensation plans:

– Sometimes the metric is gross margin (dollars or percent) on an individual sale or deal or contract

– Sometimes the metric is account profitability, particularly for Global or Key Accounts

– For sales management, the metric is usually linked to profitability within some higher organizational level, such as a division, group, or corporate


Trend #1—Focusing on Profitable Growth

Sample Customer Profitability Analysis

• A company had traditionally allocated most of its sales effort on mid-sized customers

• This analysis led to a re-shifting of sales resources since the very smallest and very largest deals were actually the most profitable

100%

56%

8%

10%

6%

5%

15%

% of Profits

$377.914.2%

$4.7

$58.2

$23.4

$8.8

$4.7

$0.8

Avg Margin ($000)

15.9%

14.2%

19.9%Smallest

15.2%ALL

16.9%Large

13.5%

Avg MarginClient Size

100%

56%

8%

10%

6%

5%

15%

% of Profits

$377.914.2%Mega

$4.7

$58.2

$23.4

$8.8

$4.7

$0.8

Avg Margin ($000)

15.9%

14.2%

19.9%

15.2%ALL

16.9%

13.5%

Avg MarginCustomer

Size

Mid-size


Trend #2—Managing Costs

Coming out of the recession, companies are still striving to reduce sales costs (and SG&A costs in general) in response to the slumping market conditions

Redesigning sales processes to remove inefficiencies and maintain existing market coverage with fewer and/or cheaper resources

Reevaluating the geographic market coverage to optimize their sales force deployment against their customers

Modifying coverage of less profitable customers to lower cost channels (i.e., telesales, Internet, resellers) or exiting unprofitable markets altogether

Impact on Sales Management Process/Focus Movement to greater pay-at-risk to reduce fixed costs associated with sales force

operations Implementation of sales compensation programs for new channels and/or roles


Trend #3—Refining Segmentation Models

As customers become more sophisticated and educated purchasers, companies are continuously are becoming more sophisticated in their customer segmentation and how they go-to-market against those segments

The most basic segmentation, company size, is giving way to segmentation based on buyer behavior (how, where, when, and through which channel, they wish to purchase), customer profitability, account potential, industry specialty, or some combination as the segmentation criteria of the future

Tailored value propositions, targeted to the specific customer segment are being developed enabling the sales resource to sell more effectively

Sales organizations and selling roles are being transformed to accommodate these new models with new performance and skill expectations (multi-channel models, multiple sales forces, niche selling roles)

Impact on Sales Management Process/Focus Introduction of metrics that reflect the particular customer segment:

– Efficiency metrics for transactional buyer segments (i.e., # of customers sold, transaction speed)

– Effectiveness metrics for consultative buyer segments (i.e., close rate, customer satisfaction, share of wallet)

– Other tailored, segment-specific metrics


Cost of Sales Across Sales Roles/Levels and Customer Segments can Vary Considerably and Drive Decisions

Rep LevelCost of Sales

II 13%

III 14%

IV 14%

V 14%

Total 14%

Customer Segment Cost of Sales

A 3%

B 7%

C 20%

D 29%

E 55%


Trend #4—Consultative Versus Transactional Selling

As the decision making authority for many B2B purchases rises to the executive suite, companies are all feeling greater pressure to better differentiate their offering from their competition

Selling just a product or service’s “features and benefits” is inadequate in many selling situations as executive decision makers demand an understanding about how your product or service will improve their business performance and shareholder or owner wealth

As product offerings broaden to meet ever more sophisticated client needs for a complete solution to their problem, the sales professional’s ability to advise the client and consult and guide on their business issue is becoming increasingly in demand

The sales professional who is perceived as the client’s “trusted advisor” with the foresight to anticipate client needs and challenges within the competitive environment they are facing maintains an unparallel position and stature with that client

The sales professional who can orchestrate and help in coordinating all the resources involved in meeting a client’s needs such as channel partners, internal vendor resources, supply chain is also becoming more evident

Impact on Sales Management Process/Focus Varies depending on exact nature of solution sales

– Cross-sell metrics

– “Basket of goods” metrics to reward solutions, not individual products sales

– Rewards for attach rates of ancillary services


Sales and Sales Management Roles in Many Industries Are Migrating Rapidly From Transaction-based Legacies to Higher Level Selling With More Complex Offerings

Partnership/Alliance Model

─Strategic, business-to-business relationship

─Doing business through multiple agreements Consultative Model

─Complex products/services

─Functional integration of business processes

─Long-term relationships with customers Solution Model

─Attempt to convert customers to preferred accounts

─Important to understand customer’s needs

─Goal is repeat and referral business Transactional Model

─Simple products/services

─Inventory management is essential

─Focus on high volume, multiple customers

─Product or price differentiation is key

Customer Buying Center

Sales Models

Purchasing & Administration

Department/Supervisory Management

Operational Executives

Executive Suite


Each Sales Model Has Unique Implications for the Role, Selling Process, and Management Practices

Transactional Solution Consultative Partnership / Alliance

Customer Buying Center Purchasing & AdministrationDepartment / Supervisory

ManagementOperational Executives Executive Suite

Value Proposition

Feature, function, benefit Product cost Availability

Product sets/bundles Operating costs Dependability

Creativity Operating results, profitability Confidence, risk mgmt

Competitive advantage Strategic positioning Shared goals, risks

Sales Focus

Activities Products Programs

Product sets Solutions Programs

Diagnostics Advice/counsel Operations, programs

Business strategy Organization integration Collaboration, resources

Sales Skills Product knowledge Pricing, persistence

Understands value Creativity to see alternatives

Business skills & acumen Value creation, political skills

Strategic thinker Leadership skills

Target Account Focus* A, B, C A, B, C A, B, C A

Role of Field Sales Management

Supervision Recruiting, training Territory management

Technical resource Coach; goal setting Opportunity mgmt

Resource management Senior mgmt relationships Strategist, coach

n/a

Performance Measures Orders, revenue Number of accounts

Sales to quota/growth Product and services sales

Account profitability Line expansion

Perf-based agreements Profitability; value; savings

Pay Mix 0/100 - 50/50 50/50–70/30 70/30–80/20 80/20–100/0

Payout Mechanism Commission Commission/Bonus Bonus/Commission Bonus

Payout Timing Weekly/Monthly Monthly/Quarterly Quarterly/Semi-Annual Annual

*Account Size: A-Large, B-Medium, C-Small

Co

mp

en

sa

tio

n

ElementSales Model


Trend #5—Channels Gaining Prominence in Sales StrategiesChannel partners are evolving to cover some key accounts previously covered by the field direct

D Small Business

C Mid-Market

BKey Accounts

AStrategic Accounts

D Small Business

C Mid-Market

BKey Accounts

AStrategic Accounts

Current Future

Direct

Partner


Characteristics of high-performing sales efforts

Front-line Sales

Managers

Consistent execution of sales processes

and training

Clear line of sight:

Rigorous management

processes Culture Strategy Employees Customers

Courage to change

Courage to change

Co

ura

ge

to c

ha

ng

eCo

ura

ge

to

ch

an

ge

Trend #6—Evolving Role and Impact of the Front-line Sales Manager


Front-Line Sales Leaders in High-Performing Sales Organizations Are Focused on Managing and Leading the Critical Sales Assets to Meet (And Exceed) Objectives

Historical focus of front-line manager role

Sell/close deals

Recruit, train

Manage expenses

Paperwork/reports/meetings

Corporate initiatives/ problem solving

Future focus of front-line manager role

Key customer relationships

Right sales rep skills, behaviors

Engage, energize

Staffing levels/resources

Discipline of management processes & tools

Exceed objectives!


The Right People in These Key Roles Building the Right Capabilities Will Ultimately Be the Means to Success

Engaging and coaching

… the most critical job of the front-line sales leader

Future front-line manager role

Protect/expand customer relationships

Develop the right skills and drive the right behaviors in sales people

Engage, energize, motivate sales people

Staffing levels

Drive discipline/use of sales processes, tools


How High-Performing Companies have Structured and Nurtured the Sales Manager Role


High-performing front-line managers produce higher performing sales people, a winning culture, and lower turnover!

High-performing front-line managers produce higher performing sales people, a winning culture, and lower turnover!

Quota Performance100%

From <40% of Sales People above Quota

To >60% of Sales People above Quota

Shifting the performance curve to the right!

What would be the financial impact at your company?

What If More of Your Sales Managers Operated Like Your Top-performing Sales Managers?


The Top-performing Managers Deliver More Growth, Better Plan Achievement, and More Productivity Per Rep!

Summary Statistics Top Median2009 Sales $25,300,000 $19,250,0002010 Sales $28,000,000 $20,100,000% Growth 10.7% 4.5%% Plan 108% 102%Span of Control 9.5 9.0Sales / Rep $2,950,000 $2,250,000Incentive Payout $32,000 $15,000Tenure 9.0 13.5Salary $110,000 $90,000Total Cash Compensation $143,132 $105,000Rank 11 52

For example


In a Recent Time-allocation Study of Sales Managers, Those at the Top Quartile of Performance Spent the Most Time Coaching

High-performing Sales Managers spend more time

coaching

Time Allocation of Sales Managers

10% 9% 8%

18% 15%11%

9%8%

8%

18%

15%

13%

37%

42% 53%

8% 11% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Avg. bottom 25% Avg. middle 50% Avg. top 25%

Non-Sales Administration Performance management Planning Coaching Sales calls


Survey Results From High-performing Sales Managers are very Different than Those From the Field Overall

Selected survey responses—Top and solid performers

Sol

idpe

rfor

mer

s

Top

perf

orm

ers

I am empowered to make business decisions in the field 2.8 1.3

My manager is empowered to make businessdecisions in the field 2.8 1.7

Co. always communicates the reasoning behindbusiness decisions 2.8 1.7

The criteria for promotion to the next levelis fair 1.7 1.0

The process for promotion to the next level is fair 2.3 1.7

The pay beyond target performanceis worth the additional effort 1.7 1.0

The crediting process encourages sales people towork together all the time 2.3 1.7

The pay that managers can earn beyond target performanceis worth the additional effort 1.7 1.0

Solid performers Top performers

1 2 3 4

Strongly disagree Strongly agree


Survey Results From High-performing Sales Managers are Very Different Than Those From the Field Overall

Selected survey responses—Top and solid performers

Most impact Least impact

My performance would improve the most if:

Sol

idpe

rfor

mer

s

Top

perf

orm

ers

There was improved sales skills training 3.4 6.3

We had more freedom to make key business decisions in the field

4.0 4.0

My team did not have to focus as much on operations issues

4.2 3.0

I had more freedom to make key business decisions in the field

4.8 1.0

My team had additional administrative and customer service support

4.8 5.7

My team did not have as many reports to review or complete

5.2 5.0

There was better product training 5.4 5.7

My team did not have to drive as far between customer visits

8.8 7.3

Solid performers Top performers

1 2 3 4 5 6 7 8 9


Each Sales Model has Unique Implications for the Role, Selling Process, and Management Practices

Transactional Solution ConsultativePartnership /

Alliance

Customer Buying Center

Purchasing & AdministrationDepartment / Supervisory

ManagementOperational Executives Executive Suite

Value Proposition Feature, function, benefit Product cost Availability

Product sets/bundles Operating costs Dependability

Creativity Operating results,

profitability Confidence, risk mgmt

Competitive advantage Strategic positioning Shared goals, risks

Sales Focus Activities Products Programs

Product sets Solutions Programs

Diagnostics Advice/counsel Operations, programs

Business strategy Organization integration Collaboration, resources

Sales Skills Product knowledge Pricing, persistence

Understands value Creativity to see alternatives

Business skills & acumen Value creation, political skills

Strategic thinker Leadership skills

Target Account Focus*

A, B, C A, B, C A, B, C A

Role of Field Sales Management

Supervision Recruiting, training Territory management

Technical resource Coach; goal setting Opportunity mgmt

Resource management Senior mgmt

relationships Strategist, coach

n/a

Performance Measures

Orders, revenue Number of accounts

Sales to quota/growth Product and services sales

Account profitability Line expansion

Perf-based agreements Profitability; value; savings

Pay Mix 0/100 - 50/50 50/50 - 70/30 70/30 - 80/20 80/20 - 100/0

Payout Mechanism Commission Commission/Bonus Bonus/Commission Bonus

Payout Timing Weekly/Monthly Monthly/Quarterly Quarterly/Semi-Annual Annual

*Account Size: A-Large, B-Medium, C-Small

Co

mp

en

sa

tio

n

ElementSales Model


RIGHT BEHAVIORS …. The Foundation

(Competencies, skills, activities, tools, etc.)

It Takes More Than Just the Right Skills and Tools to Maximize Performance …


RIGHT

FOCUS/

VALUES

RIGHT BEHAVIORS …. The Foundation

(Includes: competencies, skills, activities, tools, etc.)

It Takes The Right Focus and Strategies!

The real difference between high performers and the rest of the pack lies in having the right focus and the right strategies … in every industry!

What really ensures success and accelerates positive change

RIGHT STRATEGIES


Focus on Excellence—High-Performing Sales Managers Have Very Different Characteristics Than the Rest of the Pack

High Performers

Infectious Passion

Analysis and Innovation

Long-Term Perspective

Superior Market Knowledge

Drive for Success

Others

Positive Attitude

Implement Tools and Systems

Focus only on Annual Results

Narrow Account Focus

Check the boxes

Most of these gaps can be bridged through changes in role structure, selection, development, and other processes

Illustrative Example Output


The Journey to High-Performing Sales Leaders Starts With Identifying the Right Focus and Strategies in Your Sales Organization, not Just the Right Competencies…

• Faster change process

• Lower risk process

…. and then transferring them to everyone!

high-performing Sales Organization

Right Focus

Right Strategies

Right Behaviors/ Activities

Today’sSales Organization

Right Focus

Right Strategies

Right Behaviors/ Activities


Restructuring the Role and Providing the Right Focus and Strategies Will Ultimately Be the Means to Success

Engagingand coaching

… the most critical job of the front-line sales leader

Future Focus

Protect / expand customer relationships

Develop the right skills and drive the right behaviors in sales people

Engage, energize, motivate sales people

Staffing levels

Drive discipline/use of sales processes, tools

Historical Focus

Sell/close deals

Recruit, train

Manage expenses

Paperwork, reports, meetings

Corporate initiatives, problem solving


Two of the Key Drivers of Sales Force Performance

? Sales Force

Engagement

Customer

Loyalty


Front-line Sales

Manager

Customer Loyalty

Sales Force Engagement

Key Accountabilities

• Customer relationships and coverage• Sales rep skills and abilities• Sales staffing levels and turnover• Energy, engagement, and motivation of the

field• Leveraging key processes and tools

Connecting and Tracking Customer Loyalty and Sales Force Engagement, Through the Sales Manager…


… will drive more stable and predictable sales results

Front Line Sales

Manager

Customer Loyalty

Sales Force Engagement

Drivers/Metrics of Customer Loyalty

• Net Promoter Score (NPS)• Client/Customer Promise• Retention Rates• Expertise/Problem Solving• Integrity• Responsiveness• Value• Penetration, share of Wallet

Top Drivers of Sales Force Engagement

• Manager understands what motivates me• Have resources necessary to do my job• Trust senior leadership of the organization• Involved in decisions that affect my work• Alignment of personal and

organization goals, culture

Measurement & Accountability

Connecting and tracking customer loyalty and sales force engagement, through the sales manager …


Group Discussion #2

How many of you are coming close to structuring the Sales Manager role in the ways we have described above?

What has worked or not worked, from your experience?


Implications for Sales and Sales Management Incentive Design


Trends We're Seeing in Sales Compensation Plans

Longer, more complex sales cycles leading to more bonus over commission General migration toward global alignment More use of profit as a key metric Overall compensation is less about being competitive within the market, and

more about how much business a sales rep can generate (i.e. cost of sales) Greater percentage of pay at risk More efficient plan administration processes and tools More sophisticated analytics Heightened sales compensation plan governance

Better alignment between sales managers and the sales people they manage


Incentive Plan Designs Should Reflect the Balance Between the Strength of Management Processes and Reliance on Incentive Plans to Drive Behaviors

High Reliance on Incentive Plan

Low Reliance on Incentive Plan

Weak (Account) Management Processes

Strong (Account) Management Processes

One/Two Metrics + Scorecards

Multiple Metrics + Product SPIFs

All-Inclusive, Complex Incentive

Plan

One Metric Only

45


Breakout Session #2

Based on your experience and what we have discussed so far today, what plan design elements do you think will support the evolving Sales Manager role and what will not work?

Plan Design Element Supports Evolving Role Likely Will Not work Well

Pay Mix _________________________

_________________________

_________________________

_________________________

Performance Measures _________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

Delivery Mechanics _________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

Pay & Performance Timing

_________________________

_________________________

_________________________

_________________________


Sales Compensation Plan Alignment Does Not Mean Sameness!

Metrics

Sales Rep Incentive Plan

President’s Club

Management Processes

Sales Rep Promotion

Criteria

Internal Ranking

Sales Manager Incentive Plan

Sales/Gross Profit ($/Growth)

X X X X

Field Contribution Margin ($)

X

Strategic Products X X X X X

Account base X

Segment Penetration

X X

Customer Loyalty X X

Sales Engagement

X X


Breakout Session #2

Based on your experience and what we have discussed so far today, plan design elements do you think will support the evolving Sales Manager role and what will not work?

Plan Design Element Supports Evolving Role Likely Will Not work Well

Pay Mix 70:30 to 75:25 More leveraged than 60:40 (at target)

Less leveraged than 80:20

Performance Measures

Team sales goalTeam profit versus goalManager quality (# or % of direct

reports achieving quota)Team strategic initiative success

Individual sales performance (in most cases)

Expense managementSales activities (as opposed to

results)

Delivery Mechanics Quota-bonus Commission overrides Individual commissionsCorporate or broad-based (non-

sales) incentive plans

Pay & Performance Timing

Quarterly, semi-annual, or annual payment timing

Annual performance timing

Monthly or quarterly performance timing

Consulting | Global Compensation & TalentProprietary & Confidential | AA/SF/GCSOF.PPT/LS-11581 02/2012 49Market/Division/Tier 3 (Optional) | Practice Group/Tier 4 (Optional)Proprietary & Confidential (Optional) | Date (Optional) 4949Consulting | Global Compensation & TalentProprietary & Confidential | 09755/OV001RB.PPT/LS-11581 06/2012

Illustration of “Manager Quality” Bonus

Purpose & Considerations:• Intended to send a strong message about importance of managing all direct reports to

succeed • May be problematic, mathematically, if total number of direct reports is below 8

# of Direct Repts >100% of Goal

Annual Bonus

(% of Target)

9–10 200%

8-9 150%

6–7 (Target) 100%

4-5 50%

0-3 0%

Bonus on # of Direct Reports > GoalMeasured & Paid Annually


Aligning Sales Manager and Sales Representative Compensation

Compensation and Career Progression

X

X

X

2nd level Manager

Sales Rep #1

X

X

$150K

$100K

$50K

Payout at 100% of quota

A promotion to a manager level position is the only way for pay to increase

Top 10%2. Instead of transferring to management, a sales rep can stay on to increase his/her pay

1. A sales rep can transfer to a manager level position

Sales Rep #2

Pay Level

X

X

X

2nd level Manager

Front-line Manager

Payout Topped Off

Single Path Dual Path

Front-line Manager


Group Discussion/Case Study

Company Situation• Mid-sized health insurance company that sells

exclusively through brokers • Rapid growth in recent years due (mostly) to

competitors leaving its local market• Future growth will be more challenging; seeking

new ways to maintain high growth levels

Sales Roles & Process• Business Development “hunters” responsible for

acquiring brand new accounts from competitors• Account Executive “farmers” responsible for

retaining and expanding existing accounts• Sales Managers responsible for managing both

BD and AE roles

Current Sales Manager Incentive Plan• Override commission on new account sales• Override commission on existing account sales• Personal new account sales commission• Personal existing account sales commission• Holiday bonus• (No targets, team quotas, or individual quotas)

Questions for Group

• Does the current sales manager plan seem well designed?

• What additional information do you need to form an opinion here?

• What would you change? (Think in terms of mix, performance measures, delivery mechanics, and pay/performance timing.)


In Summary …

The sales manager role is starting to get the attention and investment it commands

The sales manager role is evolving from being a tactical manager to a strategic leader and motivator

The nature and impact of the role of the sales manager is different than other sales roles and needs to be approached differently

Getting the role right isn’t costly to do and has a tremendous ROI

Aligning compensation plans between sales people and sales managers is critical … not the same plans but complementary

Overrides for sales managers typically don’t meet the needs of the business. They are too tactical in nature and to not provide sufficient pay-for-performance emphasis


Forum Next Steps: Dates, Topics, Location


Next Steps: Specific Items for Discussion

Meeting Timing: Late January? February? Meeting Timing: Morning still work? Meeting Host/Location: Who is willing? Agenda Topics: What are members interested in discussing? Networking Event: Is there interest in a pre-/post-meeting social gathering?


Potential Agenda Topics

Sales Operations Functional Issues: Ownership, Resources, Scope of Responsibilities, Governance/Facilitation of Other Functions, etc.

Sales Analytics/Reporting: Products Used, Best Practices, Future Plans Sales Training: Programs Used, Typical Amounts, Measuring ROI, etc. Candidate Assessment and Selection: Process, Tools, Best Practices Quota Setting/Forecasting: Process, Tools, Best Practices Compensation Design: Process, Roles, Timing, Key Challenges, Best Practices Compensation Administration and Governance: Roles, Technology Tools, Number of

Resources Allocated Measurement Processes and Benchmarks: Cost of Sales, Crediting, Return on Sales

Compensation Sales Enabling Technology (e.g., Sales Force Automation, CRM): Products Used,

Implementation, Usage Challenges, Best Practices, etc.


Networking Lunch

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Hosted by Aon Hewitt November 2, 2012

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