The Rightful Owner of Sales Compensation is…

In the Sales world, the start of a New Year often brings with it a fervent roll out of new compensation plans. It's the one activity that garners the most interest from all quarters of the sales force. After all, a good compensation plan can drive the right behaviors, and retain and attract top talent.

The compensation plan design process itself is anything but simple though. Its scope overlaps with the domain of multiple functions—Sales Ops, HR, Finance, and Legal being the most vocal participants and stakeholders. Each, with often competing interests, claims ownership of sales compensation design. It's no wonder we see compensation plans often stray away from the broader business goals of the organization.

Who then is best suited to own sales compensation?

In the last few weeks, we've seen a healthy debate on the topic take place on the Sales Ops Forum. While most member companies lean towards Sales Ops as the primary owner, two things are clear:

1) It's not who owns sales compensation design but how stakeholders collaborate with each other that results in a strong compensation plan. Undoubtedly, each function has an important role to play. HR ensures plans comply with labor laws, and are fair and transparent. Legal identifies areas of risk, and promotes regulatory compliance. Finance ensures plans align with business goals, and don't strain company health.

The absence of any one stakeholder can seriously jeopardize the entire exercise. Companies where all key roles and viewpoints are represented don't struggle with who owns sales compensation. What's needed is a collaborative "group" approach rather than a single dominant "primary" owner of the design process.

2) How the sales force perceives different stakeholders is important in deciding ownership of the compensation design process. When it comes to sales compensation plan effectiveness, communication is even more important than plan design to secure sales force buy in. Even a brilliant plan positioned poorly in front of the sales force can lead to disengagement and resentment over proposed changes.

One member reported that when Finance was the primary owner of sales compensation, no matter how plan changes were communicated, they were perceived by the sales force as a cost cutting measure. Many companies defer to Sales Ops for this very reason, as plans are then seen as developed by sales peers.

In your experience, is it really important who owns sales compensation? Share your thoughts below.

SEC Members, read the ongoing discussion on the Sales Ops Forum on who owns sales compensation plan design. Also, visit our Compensation Topic Center to learn more on how to design and communicate compensation plan changes.