"Eighty Percent of my Sales Force are not making their numbers! No one will earn a bonus this year! What should I do?"

As we reach the end of 2010, the difficult economy continues and times are generally tough for sales forces. As with 2009, we are hearing that some sales forces and representatives are again not achieving expected results and will not receive normal incentive payouts. In this environment, we are reminded of some advice on this subject we included in our June 2009 Corner Office Gazette. I thought it might be a good idea to revisit it again.

From 2009

In a recent workshop that I taught on the subject of sales force compensation at the University of Wisconsin, one of the participants outlined a dilemma he faced—80% of his sales force would not earn a bonus due to factors beyond their control. His question: What to do? Many executives are facing similar situations today and while the "rule" says that no bonus should be earned, common sense suggests another course of action. We recommend that executives faced with such a dilemma make a conscious decision to write new sales-payout rules for 2009. These new rules should assure that the top players will all get a payout—in spite of bad luck or poor economic times. It should work something like this:

Top 1/3 of the sales force earns a uniform bonus payout (say $15,000—the amount is your choice—but usually less than a "par" bonus) The next 1/3 will earn half of the top 1/3 (say $7,500); and The bottom 1/3 earns no bonus.

What is the benefit? You have told your best sellers that they mean a great deal to the company and we want then around in 2010 and beyond—and you can be assured that they will be inclined to stay. And, you have also sent a message to the poorer performers. We have often told clients that a badly-designed sales pay plan becomes a discretionary plan in the end. Well, I guess this fellow has a discretionary plan this year. Can you rank your top performers high to low? I bet you can. Do it today!

What To Do Now That You Have Written Your Strategic Statement.

During the last two months, we have discussed the strategic-planning process. We have previously outlined: Using unique and tested methodologies for determining what your company is today and what it can be (September); and, How to create a clear and concise statement of your company's strategy (August). Once you have been successful with the above two steps in the planning process, it is now time to actually put pen to paper and write the company's strategic plan. With some companies, writing the strategic plan becomes a long-winded exercise wrapped in flowery prose and spreadsheets. Wilkening & Company believes that—like any other successful business enterprise—it should be short and to the point. We believe that a successful plan will be divided into only four simple sections. Let's look at each in terms of the questions to be answered: What are the key things that need to be done? Generally there are never more than four to six major actions that need to be taken to achieve a successful business outcome; if that many. It may be an acquisition, an expansion of manufacturing capacity, development of new technologies or staff expansions in such areas as the sales force. These should be simple and easily described—use the 50-word rule (i.e.: if you cannot describe it in 50 words then you do not know what you are trying to do.) Who is going to do it? Each of the above items should be assigned to an executive-in-charge (other than the CEO; unless unavoidable), who works toward a hard completion date (within the next two years) and who has a funded-capital budget to finish the work.  This is an obvious but often overlooked step. How will we know we have succeeded with the strategic plan? As steps toward achieving its strategic goals are achieved, a company will begin to see and measure results and progress. We believe that a company and its management must decide on the onset how it will know its plan is begin fulfilled; or not. What are the metrics, and when will the results be seen? The best way to do that is to establish a multi-year measurement scheme. As an example, consider the company whose statement of strategy you read about in the August Corner Office Gazette. Their "strategic" metrics are shown below. What must we do to build the foundation for future strategic success?  We believe that one of the most important things a company must do in creating its strategic plan is not to lose sight of its continuing need to improve its productivity, its quality and the strength of its people. We consider this part of any strategic plan.The last section of the strategic plan should outline what the company will do and invest in to improve productivity, quality and its people. Some purists would not consider this part of a strategic plan. Wilkening & Company considers such a discussion and outline essential to the plan. One of the pivotal challenges in creating a true strategic plan is avoiding the compilation of a thick set of successive annual budgets (with all of their underlying spreadsheets and charts); and calling it the strategic plan. We find the trick is to keep it simple and say it in words. That is what the above format tries to accomplish. During the last few months we have tried to provide assistance and help to the company preparing for and creating its strategic plan for the coming years. I hope we have done that. However, what if you are not in the strategic planning process this year? How can you apply these ideas and recommendations? Well, just take the dip. We suggest you do the following. Take our planning outline—as shown above—and write your own plan before year's end. (Of course, feel free to modify it if you like.) Do not worry about research. Do not convene a bunch of meetings with the usual suspects. Just sit down and write your own four-step 2011-14strategic plan—and call it a draft. It will be a very revealing exercise and well prepare you, your company and the Board for future strategic planning. We think you will enjoy doing it.

Wilkening & Company has assisted clients in the formulation and implementation of business strategy. If you like overall assistance with your strategy or want to write your plan (today), give us a call. We would be glad to help.