Is your compensation plan broken? How do you know if it’s broken?
In this video, I will explain the symptoms of a broken compensation plan, but first, let’s explore what a compensation plan is supposed to do for your company.
Watch the video below to learn more.
Purposes Of Compensation Plans
Compensation plans should encourage and reward 12 specific behaviors. What are these specific behaviors?
The 12 Behaviors
- Personally purchasing your products or services
- Selling to customers (non-participants of the income opportunity)
- Introducing the income opportunity to others (sponsoring)
- Training, supporting, and nurturing others
- Becoming a leader
- 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
Symptoms Of Broken Plans
Compensation plans that are broken exhibit one or more of the following conditions:
Insufficient Recruiting
If the percentage who have recruited is less than your goal percentage, your compensation plan needs attention, or your goal needs to be revised downward, or perhaps both.
Low Secondary Rank Advancements
If your compensation plan’s secondary rank advancement percentage is less than your goal, either your compensation plan needs to be adjusted to meet that goal, or your goal needs to be lowered, or both.
Unbalanced Higher Rank Advancements
The percentage who advance to each rank in your compensation plan will vary. High percentages are indicative of easy rank promotions, whereas low percentages are symptoms of difficult rank advancements. Compare the results with your goals to identify areas in need of adjustment. Also, pay attention to wild swings in the percentages. They shouldn’t be present.
Insufficient Leadership
Every compensation plan should have leadership ranks. The first of these leadership ranks deserves special attention. If your leadership percentage is less than your goal, your compensation plan may need to be adjusted or perhaps an earlier rank should be treated as the first leadership rank.
Lacking Retail Sales
Some direct selling companies encourage sales to non-participants in the income opportunity. If your percentage of sales to non-participants is less than your target or if it is trending downward, your compensation plan may need attention.
Inadequate Activity
Your compensation plan likely has a monthly personal sales volume activity requirement or perhaps a requirement that sums personal sales over several consecutive months. If your percentage active is less than your target or if it is trending downward, your compensation plan and/or other areas of your business may need attention.
Conclusion
If your compensation plan is exhibiting one or more of the above symptoms or you need help setting your target percentages, we can help you. For help diagnosing and improving your compensation plan, contact Jay at Sylvina Consulting at 503.244.8787.
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.
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