In a BLR webinar entitled "Sales Compensation Strategies: How to Motivate and Re-Energize Your Sales Staff in a Challenging Economy," Dan Kleinman, principal of California-based Dan Kleinman Consulting, explained what some did right with sales compensation plans during the challenging economy. Successful organizations:

• Didn't waiver from their compensation approach (very few one-offs);
• Kept to payout deadlines; were error free;
• Avoided bad precedents (people have selective recall);
• Didn't panic or perpetuate disastrous behavior;
• Kept to the fundamentals (avoided manipulation of compensation; avoided mid-stream payout changes); and
• Modeled and remodeled (factored in cost of sales; worked the thresholds).

And, when it became tolerable:

• They closed out their plans.
• They paid off the participants to date.
• And they started over!

Profitability starts with a premise such as alignment.

• Alignment of costs paid with the value of results achieved
• Alignment of plan goals with costs required
• Alignment of payouts with corporate results
• Alignment of selling with company strategies

Profitability measures differentiate how you reward and pay for:

• Selling product mix
• Selling to the margin
• Lowering cost of sales
• Revenue received

Dan Kleinman is the principal of Dan Kleinman Consulting (www. dankleinmanconsulting.com), a California-based compensation and human resource consulting firm. For the past 18 years, he has served as an independent consultant for a broad spectrum of regional, national, and international companies, providing compensation, performance, organizational planning, and reward-system design services. His last assignment was serving as vice president and manager of compensation, benefits, human resources information systems, and payroll for Charles Schwab.

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