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I would also recommend that any short-term "SPIFFS" be non-cash based (unless the goal of the SPIFF is to offset a reduction in income) in order to reduce the financial impact of the SPIFF going away. Short-term cash incentives have a way of growing into entitlements.

The other thing to do is take a more divergent approach and create incentives for sales people to talk to their clients about things that can reduce costs, open new markets, grow horizontally in a client - in other words - non-traditional activities. You can offset a downturn in sales by a corresponding reduction in costs.

Many times a downturn in the economy is something that cannot be "worked through" my simply making more calls.

Use your sales people as the tip of the spear and motivate them to look for ways to offset the downturn outside their normal sales spiel.

Good thoughts, Paul - thanks for sharing them here. I also like the point about the potential need for sales people to approach their clients from new angles - cost reduction, horizontal growth, etc. This may be a training and development step in addition to an incentive step.

You should post on this topic at your blog (strategies for an economic slowdown, if it comes) - particularly addressing the non-cash angle, which is something you understand far better than I. Hint, hint!

I'm clearly not a compensation expert, but a lifetime of watching sales compensation plans leads me to suggest that when times get tough or when big exceptions occur, companies are too willing to bail out the reps by awarding bonuses anyway or changing the plan. They are also far too willing to snatch back compensation in the form of changing the plan when the salespeople start to make "too much" money.

Good point Wally. But... (there's always a but) sales performance is not an absolute. The goal of any compensation program or non-cash incentive is to drive behaviors that contribute to the company's success and the individual's success. It is not always to hit an absolute number. The goals and targets are based on experience, territory, market, etc.

If a company is in an industry that is going through change (good or bad) that has little to do with the process/performance of an individual, it is in the best interest of the company to find a way to help the individual out. I'm not suggesting that they get paid the same - but there should be some consideration shown for the fact their success rate is suffering through no fault of their own.

Conversely, I don't believe a company should penalize it's people for being too successful. If I did what you wanted you should pay me. I don't believe in pay "top stops" for sales people.

A company would be better off helping during times of pain and allowing people to succeed to the wildest levels during times of plenty. You can keep your top performers this way and influence the up and comers as well.

Your point is valid however, there are a lot of short-sighted companies that do exactly what you said.

And Anne... your hint has been received. Will be putting something together in the next week on it. Good timing :)

Paul,
Thanks for these additional thoughts. I really appreciate your point about keeping the longer term end goal in mind - what will ultimately best support the company's and the individuals' success. As in so many other areas, we see that tendency for knee jerk, short range decisions in incentive plan management that hurt everyone in the long run.

I look forward to your post on this topic!!

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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