A Balanced Compensation Plan

March 15, 2010 By admin Leave a Comment

A balanced compensation plan is a compensation plan that rewards new representatives, business builders, and leaders appropriately for the specific behaviors it is designed to motivate.

Specific Behaviors

All multilevel compensation plans should motivate and reward these specific behaviors:

Personally purchasing your products or services
Selling to customers (non-participants of the income opportunity)
Introducing the income opportunity to others (sponsoring)
Building a team
Training, supporting, and nurturing others
Becoming a leader personally
Personally developing leaders
Helping other leaders to develop leaders
Meeting or exceeding minimum activity requirements
Being promoted to a higher rank or title
Meeting or exceeding rank maintenance requirements
Staying active and engaged in the business (retention)

The Big Picture

The budget you’ve allocated for field compensation, as a percentage of sales volume, needs to be spent wisely.

To begin, you must ensure that there are early opportunities for new representatives to make enough money to compensate them for their time and effort from selling your products or services and recruiting and training others.

Business builders must be rewarded for building teams. Just as individuals should be measured by their personal sales productivity, the sales volume produced by a team should help to determine the rate of compensation for the business builder.

Leaders should be rewarded for identifying and nurturing potential leaders on their teams, even if the potential leaders are not personally sponsored.

The compensation plan’s title promotion requirements should be set in line with your target goals for the percentage of people you wish to attain them. The higher a representative climbs in title, the more challenging the requirements should be to promote to the next title.

Higher titles can offer larger bonus percentages and/or new bonuses not provided to others.

Each type of commission or bonus should reward at least one of the behaviors listed above. Similarly, each behavior should be rewarded with one or more types of compensation.

For example, Fast Start Bonuses often reward behaviors #1-4 by incentivizing the recruiting of representatives who generate personal sales volume.

Whenever possible, eliminate paying twice for the same behavior.

Conclusion

Compensation plan design is both art and science.

Selecting the basic structure and defining the rules to motivate and reward desired behaviors for your company is a scientific endeavor. Ensuring the components work together to produce results is an art.

Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving network marketing, party plan and referral marketing companies across the globe.

Jay Leisner and Victoria Dohr authored the top-rated book for new and young network marketing, referral marketing, and party plan companies, "Start Here: The Guide to Building and Growing Your Direct Selling Company".

Available in English and Spanish. This startup guide contains 250 pages of wisdom that will guide you through the right steps to start and continue on your journey to build a successful direct selling company.

You will save thousands of dollars and hundreds of hours of your time using the information you will read in our book.

In 1986, Jay began his career in direct selling by working for a major direct selling software provider. First as a software developer and later as a project leader and a business analyst, Jay worked closely with new and established network marketing and party direct selling companies to provide them with software solutions to meet their unique requirements.

Jay contributed in many ways to the success of large implementation projects for many companies. Jay also worked with dozens of smaller companies to assist each of them in various capacities to provide them with the systems they needed to help their businesses to grow faster.

Along the way while working with them, he learned the secrets of successful direct selling companies and the challenges faced by them. In true entrepreneurial spirit, Jay’s decision in 1999 to start Sylvina Consulting as a direct selling consulting company was driven by what he saw was a need for answers, advice, and solutions.

In 2004, 2006, 2009, 2014, and 2018, Jay gave presentations on compensation plans, recognition, and field leadership development at conferences held by the US Direct Selling Association.

He traveled to South Africa in 2015, 2016, and 2017 to conduct workshops on compensation plan design and recognition programs for member companies of the South African Direct Selling Association.

In 2017, Jay spoke at the Canadian Direct Sellers Association Meeting on the importance of recognition.

More than just a compensation plan expert, Jay is exceptionally skilled at advising new and established companies on business strategies. Before offering advice or solutions, he asks important questions to understand each client’s specific concerns and goals.

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