Talent recruitment and retention is a universal problem that all organisations encounter. In a highly developed market economy like Singapore’s, this problem is even more acute. A recent news report cautioned that Singapore’s labour shortage will persist in 2014.
Recruitment experts’ advice is that Singapore firms will have to adopt more competitive hiring strategies by offering benefits, compensation and remuneration packages to get in the best talent.
But how does one determine what is the best compensation and benefits package? Especially in regards to the compensation plan for sales talent, this can be tricky. With the highly competitive global market, how can we keep talented sales people happy and productive? Does the answer lie in the incentive compensation (ICM) plan?
If Singapore organisations want to get it right in terms of recruiting and retaining their top sales talent, they need to ensure that their ICM processes adhere to these three guidelines:
1. Start with a Simple Sales Compensation Plan
Most sales organisations find it a chore to update manual ICM processes, which is prone to error and time-consuming. Some incentive pay-outs can even take up to weeks to calculate! Mistrust and low morale among the sales force can be the result of having to deal with issues such as payment lag time, inaccuracy and a complicated sales compensation plan.
To simplify the sales compensation plan, a sales performance management (SPM) assessment will help. In the assessment, all the key departments involved in the ICM process, such as IT, human resources, finance and sales will need to be evaluated.
Data from all these sources will need to be included in the overall ICM system design. The end result is a more efficient, simplified and thorough sales compensation plan that can be understood by all involved.
2. Automate to Have More Timely and Accurate Pay-outs
Sales organisations need to apply a SPM solution in order to automate the distribution of incentive pay-outs. A SPM solution will be able to quickly and accurately calculate incentive payment using reliable data. Detail ICM reports can be generated so well-documented audit trails can be maintained for the purpose of compliance with government regulations.
3. Get the Right Rewards to the Right People
Many sales organisations have a standard sales compensation plan that reward both low and high performing sales people. As a result, this creates disincentives rather than incentives for sales people go beyond their sales achievement.
For example, if someone who meets less than 50 percent of his sales target is still receiving pay-outs, this may discourage him from actually reaching his targets. High performing sales people who realise this imbalance may be demotivated and may even leave the organisation so they can be fairly rewarded and recognised elsewhere.
This is another reason as to why having a SPM solution is vital. A SPM solution gives the flexibility to customise incentives based on targets, base lines, past performance and other criteria.
The solution will also enable benchmarking to current market rates so one can be sure that the incentives are attractive to both existing and potential sales talent.
To conclude, Singapore organisations need to revisit their existing ICM processes. The manual, cumbersome practices may be what are hindering them from retaining and recruiting top sales talent. Adopting an SPM solution may be the key to change this.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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