Managing your Sales Incentive Plans through a Global Crisis

The COVID-19 pandemic continues to severely impact the global economy as the world stays locked down. Countries are continuing to mandate quarantines and social distancing practices to contain the pandemic. The impact and magnitude of this crisis on the economy has created great uncertainty. A question many companies are struggling with today is how to handle their sales force, especially since the majority of these employees earn their living through incentives and commissions.

It is important to recognize that although we are weathering the same storm, not everyone is in the same boat. Sales team members who rely on face-to-face interaction and extensive travel had their world flipped upside down as it came to a startling halt. The ability to foster relationships, generate new leads, and demo products is limited to phone, emails, and video chats.  Other sales team members are falling into windfall situations selling products in high demand industries, such as sanitizers, cleaning equipment, and personal protection equipment. Both circumstances can cause the sales incentive plans to deliver pay at levels that were not planned and require a review of plan designs.

Manage your Sales Incentive Plans through a Global Crisis

Assets and Business Strategy

Before diving into revamping a sales incentive plan, it’s important to first think about the overall business strategy. How has the crisis impacted your company and is it time to re-pivot the strategy? In addition, it is important to check-in on the most important assets of any company, its people. Below are questions to consider:

  • How has demand for our products changed?
  • Do you have a pulse on your talent?
  • Is the company providing the right tools and technology to maximize employee potential?
  • Are we structured properly support the “new” environment?
  • How has the crisis impacted employees mentally?
  • Are channels of communication open and transparent?

Sales Incentive Plans

Once you review the business strategy and determined the “new normal”, it would then be an appropriate time to redesign or tweak the sales plan to ensure that it continues to align with the overall strategy. It is clear that in more cases than not, sales forces are taking financial hits. According to recently published surveys, it is expected that over 70% of companies expect COVID-19 to negatively impact on sellers’ pay by at least 5%. Companies need to determine how they want to intervene and adjust their employee’s potential earnings.

Some key avenues to explore are:

  • Paying draws to make sales employees “whole” or “partially whole” so they do not suffer from a financial hardship;
  • Using historical performance measures and results rather than current year sales;
  • Reducing quotas based on a revised business outlook;
  • Enhancing rewards through team goals rather than an individual focus;
  • Adding sales performance incentive funds (“SPIFs”) where possible;
  • Addressing windfall or bluebird situations, where the terms and provisions of incentive plans do not adequately reflect the possibility of unusual situations, such as the COVID19 pandemic, that may result in excessive and unwarranted payments due to sales team members;
  • Ensuring high performers have the opportunity to earn previous pay levels and provide retention elements into their pay mix as they may be poached by competitors; and
  • Pausing a sales plan completely and allow for discretionary payments based on business development activities.

We are living in a world where there is more uncertainty than ever, but we must hope that there is a turn around the corner. When the economy starts to come back, companies who are proactive at retaining their sales talent will come out of this stronger and on top.

Questions or need help evaluating your organization’s sales incentive plan options? Please contact Jen Givens or Tom Hurley by filling out the contact form below.

Published May 15, 2020

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Copyright © 2020 by Findley, Inc. All rights reserved.

Rethinking Human Capital Workforce Planning Post Pandemic

While business continuity is important, a company’s most vital resource is its people – and the right employees can carry an organization through difficult times. Even through the challenges wrought by the COVID-19 pandemic. But a business model only works if the right employees are executing the plan. Companies that have succeeded for decades, continually prevailing through recessions and economic hardships, have done so through workforce planning processes.

In this first half of 2020, the world has drastically changed for both companies and their employees. The U.S. economy went from record employment levels, record profits and the stock market reaching an all-time high to record unemployment levels and losses of sales and profits for nearly all companies. Organizations are looking forward to getting back to a level of normalcy as soon as possible. Any rebound to normalcy will be determined by how each company’s resources, specifically human resources, are deployed. 

Rethinking Human Capital Workforce Planning Post Pandemic

Workforce Planning Key to Recovery

As discussed in our previous article about Recalibrating Human Capital Strategy, workforce planning will be a critical area of concentration for businesses as employees return to work. However, workforce planning at this time likely will be different than in past periods of economic downturn as the current focus of the activity will be short-term. A return to normalcy is the name of the game and an effective short-term plan is critical to meet business needs. To use a sports analogy, businesses need to be prepared to immediately field the right players and put them in the right positions when the game action starts back up.

While there will be significant variation by industry segment and business type, most companies will grapple with radically changed market conditions. The biggest reality is that organizations will be adjusting their budgets to lower revenue expectations. That financial reality impacts previous assumptions related to, but not limited to, hiring, merit increases and retention. These factors will require a review of the organizational structure, roles, responsibilities, talent depth and projected talent gaps.

In addition, some market segments will recover at different intervals than others and companies need to react accordingly to this reality. Employees also need to adjust and take on different responsibilities during this period. The work world will certainly be different than before the COVID-19 pandemic.

Six Steps to Workforce Planning During Crisis

In order to weather the storm, organizations need to focus, more than ever, on retaining key talent and effectively filling open positions with the appropriate skill sets. Managing these areas significantly affects the company’s ability to return to the right levels of productivity and profitability. To ensure that an organization is prepared in the near term, leadership must implement a rigorous short-term workforce planning process.  

Every organization should address these six steps to workforce planning in a crisis:

1. Define the Strategy

  • Identify and prioritize the most critical needs
  • Prepare for potential future crisis, defining core team and role needs

2. Determine Interim Staffing Levels

  • Determine which roles and positions will not be refilled

3. Adapt Your Organization Structure

  • Redefine roles and reassign individuals to provide coverage until full staffing is achieved

4. Develop an Interim Talent Management and Acquisition Approach

  • Identify key talent depth, gaps and needs
  • Develop an aggressive recruiting strategy to address talent gaps
  • Dedicate resources to cross train employees to provide coverage where resources are short

5. Prioritize Employee Development

  • Manage frequent talent reviews to assess staffing levels and skills capability
  • Train supervisory and management team on the new realities of deploying their work teams

6. Communicate

  • Communicate workforce plan to all key stakeholders, including any changes made post-pandemic

Establish a Formal Process

While many companies utilize some aspects of this approach, it is essential that this effort becomes a formal process that is rigorously managed for the foreseeable future. Decisions and assumptions need to be documented and, most importantly, effectively communicated to all stakeholders. New thoughts and ideas on how to best deploy employees will need to be considered and implemented.

Workforce planning is key to businesses returning to normalcy. Organizations of all sizes need to devote an appropriate amount of time to this subject. As a new normal begins, a workforce planning initiative should be coupled with the other three critical areas we have identified. They include compensation/rewards strategy, employee communications/branding, and effectively managing/leading in a time of crisis. Focusing on these areas will determine how quickly and successfully businesses can rebound from the COVID-19 pandemic.

For more information about Workforce Planning strategies, contact Dan Simovic at dan.simovic@findley.com or 216.875.1917, or Sandy Turba at Sandy.Turba@findley.com or 216.875.1937

Published May 6, 2020

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Copyright © 2020 by Findley, Inc. All rights reserved.