Whenever I’m talking about variable compensation I usually end up saying some version of the same cheesy line. It goes, “The only consistent aspect of commissions is change.” I usually get a few sympathetic laughs, but it tends to hit close to home.
Compensation strategy is no different from any other business strategy, which means things change. And, we all know how much fun it is to manage around these changes. Especially when these changes directly affect someone’s paycheck. This process is generally pretty painful, but it doesn’t have to be.
Over the past four years, I’ve talked to hundreds, maybe even thousands, of people about sales compensation. And, I have narrowed down four key considerations to effectively communicate changes around compensation:
- Notify the team about the process early and keep them involved in the conversation.
- Seek feedback from your team about the compensation changes you plan to make.
- Be transparent and concise when communicating the changes.
- Follow up consistently.
These considerations aren’t going to remove all of the friction surrounding your compensation changes. There’s no one-size-fits-all miracle solution. But, these considerations are widely tested, tried, and true principles that industry professionals rely on to effectively manage change. So, let’s dive a little deeper into each of these and make change management a bit easier for you.
Involve your teams in conversations around compensation changes early and often in the process.
Compensation changes and changes to commission plans can happen for a number of different reasons. The most common include shifts in company strategy, budget adjustments, new features or products, etc. Because of this, they can also happen at any given time. For this reason, we recommend that you involve your team early on in the discussions.
Teams respond better to change when they aren’t blindsided with it. Involving them early lets them know you are making these changes with them in mind. When it comes to employee satisfaction, two major contributing factors are feeling heard and being included. Consider these statistics:
- 99% of surveyed employees want to be part of an organization that nourishes honest communication (source).
- And, effective communication in organizations leads to nearly 5x the employee retention rates (source).
Similar to letting your team know early, it’s important to communicate throughout the planning process. That way, they continue to feel like they are a part of the process. The efforts you invest in your initial communication will be wasted if you don’t maintain that line of communication.
When you change the way people get paid, it’s important to understand the planning and preparation required in their personal lives that inevitably happens as a result. Keeping your team involved will help them get a better sense of what is coming. And, allowing your team to take time to adjust will make the coming changes easier to grasp.
It’s often easier said than done, but we also recommend being as transparent with your team as possible. Share what’s appropriate, talk about a few of the ideas you have, and always explain why you are making changes.
Ask your team for feedback regarding the compensation changes you plan to make.
Another important aspect of communicating compensation changes to your team is to make it a two-way conversation. What we mean by this is that you shouldn’t just dictate changes to variable comp plans. Instead, be sure to get feedback throughout the process. Present the business case to the team and solicit opinions about how they’d solve it.
Even if you don’t end up using their suggestions, involving them will pay dividends in the future. Open it up, make it fun, give your team a voice. They will probably surprise you.
Be concise and transparent when communicating official compensation changes.
Once the changes are made, don’t beat around the bush. Present the changes and walk your employees through why these changes are made, and how they will affect them. Although fundamentally most of us agree that we should treat employees like adults, do we actually? Make sure you tell your team the full story. Walk them through different scenarios and make sure you put it as simply as possible.
Even more important than the actual delivery and rollout, is your plan for ongoing communication after the fact. Understand that people will have questions and it will be important to address those.
Although this plan can take many forms, make sure it always facilitates two-way communication. Communication from leadership to the team and communication from the team to leadership.
Prioritize consistent follow-up.
Hopefully this one is already in practice at your organization, but if not, make sure you always follow up after making any changes to your commission structure. Oftentimes you won’t learn about mistakes or issues until after they have been in practice for a while. Create an anonymous way for your employees to voice their opinions, file complaints, or even submit positive feedback.
Having consistent follow-up will help create a culture that is more comfortable with change. When employees feel blindsided by change and then that change is never discussed or revisited, you’ll find you have more unhappy employees. Keep your communication open, transparent, and accessible to ensure a happier, more engaged team.
Final thoughts on communicating compensation changes.
In just about every organization I’ve worked for and with, change is part of the culture. But what really solidifies corporate culture and differentiates the good from the bad is how you facilitate change at an organization. Are your employees happy with how they are treated during periods of change? Do they feel heard? The considerations outlined in today’s blog post are all meant to create a culture that reacts positively to change, regardless of the type of change.
I believe that compensation is the foundation for a happy employee. If an employee isn’t paid well, can they really be that happy? And if compensation is the basis for a happy employee you should take any change you make to compensation seriously and communicate that change with care.
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