Are you experiencing pay compression in your organization? Do you have a situation where the pay of new hires is similar to the pay of experienced employees? Or is the pay for individuals with widely-varying skill-sets within your organization only negligibly different? Perhaps you need to review the compensation administration within your organization?

When you are faced with a situation in which the differences in pay between individuals or even groups are no longer equitable, you may need to rethink your compensation strategies. This situation of pay compression is especially common in sales teams. This happens when there is not a reasonable gap between the top and bottom performers on the sales team. It also happens when the sales support staff is not compensated appropriately for the role they play, making the differential between sales staff and sales support staff negligible.

This is a serious situation. Having inequitable pay structures inevitably results in de-motivating your employees. So, how can you prevent this from occurring, or reverse the compensation compression once it already exists?

In a BLR webinar titled "Sales Compensation Strategies: How to Motivate and Re-Energize Your Sales Staff in a Challenging Economy," Dan Kleinman outlined some guidance on evaluating your sales compensation strategies and ensuring they do not result in a situation where you are paying inequitably or paying for behavior that does not generate results.

Step one: Assess your situation and how your current compensation plan meets your needs.

The first step you need to take is to fully understand your context. What environment are you working in? What are your business goals? What do your sales people need to do to help the business achieve those goals?

Once you know these answers, you need to determine whether your incentive schemes are in alignment with your business goals. This may take a lot of analysis. We know that creating and maintaining an appropriate style of sales compensation plan is always challenging, but never more so than in the rough-and-tumble economy that we have right now. If your team is not incentivized in ways that work toward your business goals, you are missing an important opportunity.

Step two: Understanding how to best utilize at-risk pay.

Once you've gone through the process of analyzing your business vision and goals and you understand what behaviors you want to incentivize in your team, then you're ready to utilize at-risk pay as a means of incentive. If your business already utilizes at-risk pay as part of your compensation administration, then you are in a position to be able to analyze whether it's effective.

The above information is excerpted in part from a BLR webinar titled "Sales Compensation Strategies: How to Motivate and Re-Energize Your Sales Staff in a Challenging Economy," with expert Dan Kleinman. For more information on sales compensation and pay compression challenges, order the webinar recording. To register for a future webinar, visit http://catalog.blr.com/audio.

Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. (www.dankleinmanconsulting.com) 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.