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Diana Ceballos 01.19.2023 6 min read

5 guiding principles for sales compensation practices

Salespeople are the lifeblood of any company. They are integral to the growth of a company. Companies must go beyond the salary structure to keep this growth engine ticking. Offering them compensation packages comprising assured pay and bonuses is the right step. 

This post will discuss some tips that will help you design an optimal compensation plan that attracts top talent, increases productivity, and raises retention.

5 guiding principles for effective sales compensation practices

1. Transparency
Transparency is the best way to build trust and a culture of fairness. It enables you to avoid surprises, discrimination, and the loss of good people. Transparency means providing employees with information on compensation policies and practices. It also means being open about the policies and procedures to remove ambiguity. 

Companies can do it through:

  • An annual review process that explains why and how the management made decisions regarding raises or bonuses.

  • Offering clear information about performance ratings.

  • Deploying performance or sales management software to give professionals access to the latest compensation policies, formulas, and performance metrics.

2. Automation
Automation is a critical component of sales compensation. It helps with sales management and sales enablement. It also ensures that your pay-for-performance programs have the intended effect. 

Despite technological advancements, some companies are yet to automate tedious manual processes. For instance, shadow accounting and manual commission calculations consume valuable time. Automation can free them from this burden while empowering employees with relevant reports, accurate payments, and sales enablement content.

3. Sales Enablement
Sales enablement is the process of helping salespeople do their job better. It includes training, coaching, and mentoring. It intends to ensure that every team member has access to high-quality information about how to sell. 

This practice can help employees understand the product or service they sell and its impact. It ingrains in the staff the benefits of following the best practices while training them to understand the industry trends and competitor strategies.

4. Equal opportunity
Equal opportunity is a principle of fairness, but equal outcomes are not guaranteed. In the context of sales compensation practices, equal opportunity means all sales reps have an equal chance to succeed and earn rewards based on their performance.

It also means making sure your sales force gets compensated fairly. Suppose some groups of employees are disadvantaged by how performance targets are set (e.g., women or caregivers). In that case, they should receive extra training or other perks to make them more competitive.

5. Sales Management
Sales management is a critical component of sales compensation, but it's more than just setting goals and tracking metrics. It's a process that starts with the hiring interview and ends with developing your team members into leaders.

Sales management is about helping the sales team succeed by providing coaching and training. It means that if you have an employee who isn’t performing well, an effective manager will work with that employee to help them improve instead of just firing them.

Other tips to empower and reinforce your sales teams

Keep these 2 guiding principles in mind when making decisions about sales compensation:

1. Refrain from tying salespeople's pay to their performance. Companies should reward salespeople for the value they create, not just the number of deals closed. 

2. Make sure incentives get aligned with your goals and capabilities. 


We hope you've found this guide helpful in your quest for the perfect sales compensation strategy. Remember, there's no one correct answer — it depends on your organization and its capabilities. 

Spend less time calculating commission payments and more time driving performance

If you’re planning to empower your sales teams with an automated sales commission platform, Blitz is the solution you need to provide your teams with the tools they need to work efficiently while generating more sales. 

From automating mundane tasks to handling complex compensation calculations, Blitz can help your sales team reach its potential. 

Contact us today