Coming soon · Book Profile
The Complete Guide to Sales Force Incentive Compensation
A comprehensive guide for designing, implementing, and managing effective sales force incentive compensation plans that motivate salespeople, align with business strategy, and drive company success.
A profile of this book is on the way.
What it’s about
This book helps firms harness the power of sales force incentives while avoiding common pitfalls. It provides a complete, practical roadmap for designing and implementing compensation plans that truly work, moving beyond theory to offer actionable advice grounded in decades of experience with hundreds of companies. Readers will learn how to diagnose existing plan issues within the broader sales management system, make the four critical design decisions (pay level, salary-incentive mix, performance measures, and payout relationships), set fair and motivational goals, and manage the often-difficult transition to a new plan. Through a strategic framework, hundreds of real-world examples, and proven analytical techniques, this guide equips sales, marketing, finance, and HR leaders to build a compensation structure that attracts and retains top talent, directs sales effort effectively, and ultimately drives bottom-line results.
The through-line
- Who it’s for
- A sales, marketing, finance, or HR leader responsible for driving sales force performance.
- The problem
- The company's sales incentive plan is failing to deliver results; it may be too complex, motivating the wrong behaviors, causing turnover of top performers, or costing too much. They feel frustrated and uncertain, fearing that any change they make could backfire, demotivate the sales force, and fail to achieve critical business objectives.
- The plan
- Understand incentive compensation's role within the complete Sales Management System.
- Systematically assess your current plan to pinpoint its strengths and weaknesses.
- Design a new plan by making four critical decisions: pay level, pay mix, performance measures, and payout relationship.
- Rigorously test your proposed plan to anticipate its financial and motivational impact before launch.
- Implement the new plan with a structured communication and change management process.
- The payoff
- A highly motivated sales force that is aligned with company strategy and focused on the right activities. · The ability to attract and retain top-performing salespeople. · Achievement of sales, profit, and market share goals.
See our guide
Related profiles we’ve built
- Designing Global Sales Incentive Plans_ Step-By-Step Guide →
- Show Me the Money_ A Statistical Analysis of Commission-Based Compensation Models →
- Rewarding Excellence: Pay Strategies for the New Economy →
- Strategic Pay: Aligning Organizational Strategies and Pay Systems →
- The WorldatWork Handbook of Compensation, Benefits and Total Rewards →
Additional reading
- Sales Compensation Surveys (Appendix B) · Various Third-Party Providers
The book recommends using external survey data to set competitive pay levels. Appendix B provides a list of survey sources for readers to conduct their own market research.
- Software Vendors—Sales Compensation Administration Software (Appendix C) · Various Third-Party Vendors
The book emphasizes the need for automation in administering complex plans. Appendix C lists vendors that provide these solutions for further investigation by the reader.
- The Sales Growth Imperative · David J. Cichelli
Written by the same author, this book likely provides a broader strategic context on revenue growth, within which sales compensation is a key lever.
- Sales Compensation Almanac · The Alexander Group (David J. Cichelli's firm)
This annual publication provides updated data, trends, and benchmarks in sales compensation, serving as a contemporary supplement to the book's foundational principles.
- Organization Design for Performance: A Step-By-Step Guide · Cedric Ng Mong Shen
This book is relevant because 'Design' is the second dimension of organizational effectiveness discussed in Step 1. It provides a deeper framework for structuring departments and companies, which directly impacts the sales function's effectiveness.
- Designing Salary Structures: A Step-By-Step Guide · Cedric Ng Mong Shen
Directly complements the main book by detailing how to create the base salary structures upon which the incentive portion of total cash compensation is built.
- Predictive HR Analytics: A Step-by-Step Guide · Cedric Ng Mong Shen
Relevant for more advanced practitioners who want to use data analysis (as mentioned in Step 9) to test hypotheses about plan effectiveness and predict which factors drive sales success.
- The Future of Sales Compensation · Chad Albrecht and Steve Marley
The book points to this as a forward-looking resource to help readers think differently about how to design and implement sales compensation programs for the future.
- Driven: How Human Nature Shapes Our Choices · Paul R. Lawrence and Nitin Nohria
Referenced in Chapter 5 as providing a foundational framework on the four innate human drives (acquire, bond, learn, defend) that can be used to understand and segment sales force motivation.
- Designing a Sales Commission · Jerome A. Colletti & Mary S. Fiss
This book references it for the detailed mechanics of designing commission formulas (e.g., flat and tiered rates) that are used as examples for new product and new account incentives.