Why Choice Matters

By David J. Cocks, CEO

One of the issues we discuss often with managers is why offering a choice of compensation plans is such a smart strategic move for the business, especially in this market. Here is what we tell them...

The fact is no single compensation plan is going to be able to address the needs of all members of your sales force.

People have different levels of experience and ability. Some need more training and support; others don't want the services and prefer to be independent. Some are more willing to take risks; others value security and having a predictable income.

When you offer only one option for compensation, you are not meeting the needs of everyone who works for you as well as you could.

The result is that you leave open the door for competitors whose plans do a better job of meeting the needs of specific individuals.

The way many managers deal with this is to make exceptions. But special deals erode trust and leave some people feeling like they are not being treated fairly.

Offering a choice of plans solves these problems.

When you provide a variety of options, you allow each sales associate to choose the plan that most effectively motivates them. They can balance their need for risk and reward, as well as for support and independence.

You can design new plans that motivate more effectively than what you had before – you can remove disincentives to greater production and inspire sales people to new heights.

You can introduce a true merit-based system that fairly rewards all sales associates, regardless of their level of productivity.

This also gives you the opportunity to address legacies – outdated and unprofitable compensation structures that no longer serve the purposes for which they were designed. Instead you offer a selection of other options and let each person make their own decision. Giving people this level of control makes it substantially easier to convert your sales associates to new plans.

But what's more important is that you are introducing transparency into the compensation system. You are treating everyone with trust, respect and fairness. Instead of secretive special deals, you are showing integrity by publishing an official set of plans and letting people choose.

The result is a much stronger, more competitive business, where recruiting and retention become significantly easier.