Part 2: What You Need to Know about Sales Compensation [Webinar]

My name is Michelle Seeger with Sales Globe and I'd like to welcome you to our first series with our practitioner on sales compensation planning. So we know that everyone is getting ready to look at their sales compensation plans for this fall as we look into 2019. And I am so excited to be leading this series today. We've got a great practitioner with us today, Juliet Monser, who is actually the global director of sales compensation for Plantronics.

I'm so glad to be here today to talk about sales compensation with you.

Well, thanks a lot, Juliet. Today we're going to be discussing an issue that seems to be prevalent with all of our clients or most clients today, as they're moving from legacy products and services into cloud or value added products and services very different from what they had traditionally been offering into the marketplace. And Juliet, you've dealt with this in a few different occasions throughout your career and we're specifically going to talk about today, Plantronics. Could you just give us a little bit of a background on what is the transition that your company is going through, the exciting transformation?

Absolutely. At Plantronics, we've just gone through a major acquisition of purchasing a company, Polycom. And with that, we've more than doubled our sales force and doubled our employee population and increased our product offering from traditional headsets and soundscaping and some SaaS products to video and other voice offering, softphones, hard phones, and as we move forward, services and solution selling is a key part of our future. Additionally, from a SaaS perspective, we're really looking at expanding that business and growing it in tenfold over the next two years.

Wow, that's really aggressive growth strategy. So what I wanted to do is just take a step back, Juliet, because as you and I were discussing this, we were thinking about that road to get there, the transformation and what we call the road to profitable revenue. So before we even talk about the sales compensation plan, I'd like to take a step back and look at what we call the revenue roadmap. So the revenue roadmap is centered around four disciplines, which starts with insights. And when we think about insights, we're looking at things like competitor performance, business performance, and the macroeconomic environment. So the reasons that a company might be driven to make a change and add to their product portfolio and that actually will inform your sales strategy. And the sales strategy looks at things like the products and services that we'll be talking about with Juliet today, segmentation and targeting. So how do you actually segment the business and is it different in this new model? Than the way that it was in the old order, the value proposition and approach to market, which then informs, of course, the customer coverage model. So the selling roles and the structure, your sales process and the sales channels that you're offering the products and services to. And finally, and only then, do we actually talk about sales compensation. So, Juliet, what I'd like to do would be to take a step back before we discuss the compensation plans and let's discuss what some of the challenges were that you were trying to solve or the things that you were your key considerations as you think through the concept of the revenue roadmap.

Absolutely. The key consideration that I'm always looking for is future proofing our compensation and sales go to market strategy. It's not enough to design a program and a sales force to sell to today's market, but it's most important to set ourselves up for where we want to be in 2, 3, 5, 10 plus years. And that really starts with the people and the talent that we've attracted. And do we have the right benchmarks in place to have talent retained and acquired that we need to get to the future? So as a practitioner, I always think holistically, start with people, then I go to process. And when I think about process, I think, do we know the right tam, the total addressable market as we're moving forward? Do we have the right information on competitors so we can benchmark our plan in the go to market space? Do we understand from a process standpoint how to get information? I think one of the biggest challenges I face today is acquiring the data I need to inform our decisions for the future. And from a people process and tools would be last but very important. Can I capture the data, the TAM and our go to market strategy in a way that I can actualize it and reward people, report results and inform the decisions that my senior leaders need to make.

All right, so Juliet, you hit on a few things. You hit on change management. We're talking about talent, your process, so your strategy and go to market and then ultimately how you're going to measure the results and do people have what they need? And then of course, when we think about the sales strategy, your coverage model, and how you segment those customers and how that changes. So all those things really have very little to do with the actual incentive compensation plan.

Yes, actually, I think it has everything to do with the sales compensation plan. And sales compensation is really taking people strategy and delivering business results. In order to be a fully qualified sales compensation leader, you really have to understand the go to market, how to integrate the art and the science of people's strategy and know where the business is going. Going back to my previous comment about future proofing our plans, it's future proofing and knowing the long term strategy of the company and how to pivot the sales force to achieve those goals.

Juliet, let's talk about your engagement and involvement in some of those upstream disciplines that ultimately inform the compensation plan. So what are the things that a company should be thinking about as they consider their talent and and the current talent they have and that which is needed in the new world or with the new products and services? How do you prepare and set the organization up for success?

That's a great question and I think it falls back on governance and having a very strong governance board in the design process. So when we look at designing the sales force, we need to include compensation, sales, compensation, operations, general HR and other functions. In putting that together, I'm involved in looking at are we acquiring the right talent, where do we have blockers when we're putting out offers, Are we retaining our top performers? Who is exiting and joining the company and where are they coming from and where are our internal transfers? Moving and looking at career ladders. All those things may seem adjacent to the actual sales compensation process, but I believe it's a key feeder into the success. So having representation on a governance board will give us that outside in perspective on the talent we need to move forward.

Julia, when we talk about talent, how do you understand what it is that you need and then how do you actually ensure that you're competitive and able to attract and retain the right talent?

For me, I always spend a day in the life. When I first joined Plantronics, I interviewed over 45 salespeople in the first three weeks. And then doing side by sides, whether it's on the phone or in the car in the field, it's really important to know what your folks do day in and day out. Once you're grounded in the reality of the day to day work of your sales team, then you might do a broader assessment now that you know where folks are at from a baseline perspective and do that assessment in a way that'll tell you their aptitude to change, learn and grow. As with most companies, the ability to learn something new is more important than what folks are doing today. As we know that, we roll out new products and services and we go from having 10 core products to to 30 core products. With our new co, we have a lot of learning and education to do. We've hired really Smart, talented people that can have great relationships and they need to have a deep product understanding and know when to ask for help. So what we've done is we've engaged a few different folks, your team being one of them, to come forward and spend some time doing interviews, setting a baseline and giving us our true aspirational North Star where we want to bring people to. Just because we have talent today, doing a certain activity doesn't mean that's the activity they'll do tomorrow. And when you talk about upgrading, I also think about up leveling and skilling our folks and providing true change management. We have deep and meaningful relationships with our customers and our partners that we want to preserve and retain and take our people along for the journey.

That's excellent. So a few key takeaways is for people to think about. As you make this migration from new products and services into something current state, moving over into cloud, you want to be thinking about how you bring your people along for the journey. So what I heard was an assessment of the talent that you have and understand what you have and understand what the gaps may be. And in tomorrow's world it may even be that some people might not be in the appropriate role for this new product and service offering. But what I heard you say is it doesn't mean that they may not fit into the overall structure of the organization. So assess, understand and then make those decisions on if there is any redeployment that may be needed. But most importantly understand what training and other needs that the organization may have in order to be successful in the new world.

Absolutely. And change really requires compassion in the workplace. I think that the number one thing we face today in our new co the acquisition of Polycom is uncertainty. The more we can communicate, the more frequently we can share with transparency what we know, what we don't know and where we're going. The more relaxed everyone can be. And when I talk about compassion in the workplace, it's really about that openness and transparency to say these are the skills and roles we know we need for tomorrow. We're investing in you to find the right role and the right fit. And most of the time we believe that'll be a role with us in our new call. And when it's not, we'll treat you with compassion and humility to find a role either within the company or help you transition somewhere else where it'll be a great fit for you in the future.

So change management and communications. I love that Plantronics as a company is very focused on that, that says a lot about your culture as well. And that transcends everything in the revenue roadmap. So clear communications, but also with that empathy, understanding that there is a transition that is taking place. And as we know, all change is disruptive, no matter how big or small that it is. So being compassionate and understanding will help go a long way. We have proven it as well, Juliet. Best practices will tell us that having a strong communications plan and bringing people along the journey goes a long way to keeping the right people.

I agree. And I really believe that when you've gotten to a place where you feel like you've communicated 50 times, you're only halfway there.

That's great, Juliet. Thank you. So I'd like to shift and talk a little bit about sales process and what in your opinion are some of the things that need to be considered or looked at when you're looking at your sales process? From what you had, think about the Plantronics headset to what it is that you'll be moving over to, which is more like unified communications solutions offerings.

So today we have some key challenges having a two tier distribution model. And when I say two tier distribution model, really what I'm talking about is selling through partner and through partner to reseller to end customer. We also have an E tail business, a consumer business, and a direct business. So today what that looks like is collecting the data from our partners through point of sale. That process of collecting information is critical to the success and tracking for our sales team and our business as a whole.

All right, so thank you for that, Juliet. Now I want to get really specific and talk about in your product migration, what are some of the goals that you have as an organization and things that people need to think about. So why did you actually make a decision as an organization to go into this space and make this change? I think it would be interesting for people to understand that a little bit. And then what some of the key goals are?

Very interesting question. I think a lot of people in the market are asking, why did Plantronics acquire Polycom? And you know, for me, what I've seen is we are better together. And that's really the tagline. I love that we have branded our change management in saying, now we can offer a holistic solution in the audio space and communication solutions space to our customers. And in doing that, we can go in anywhere, offer soundscaping, headsets, audio equipment, hard phone, soft phone, video, whatever is needed so that people can really hear the future of how we work in the workplace and at home.

So Juliet, why don't you talk to us about how the roles may be changing today, the sales organization roles. So has this changed your structure or the roles that you have or you had traditionally had and how might they look?

Tomorrow we're taking a look at our go to market strategy, determining where we want to be in three to five years from now and looking at our talent to see if they can get us there based on their skills. Today what we've assessed is we need to go from selling products to providing solutions and partnerships so that our end customers and partners have what they need for the long term vision in meeting all of our needs from an audio perspective. Instead of just delivering headsets, we've moved into a SaaS environment where we can manage our audio solutions. So in short, what we're looking for are salespeople that know how to develop partnerships with many different companies and resellers and distributors in the marketplace and on the consumer side can really listen to what the consumers need and want and drive the development of new products and services.

So Juliet, this is really interesting because we have not even talked the incentive compensation plan directly yet. What we did was we talked about shift in products and services for you to maintain your competitive edge in the industry. So you're changing and doing a better together full service offering instead of just selling a headset. We've discussed how we need to be looking at the sales strategy and the segmentation of your customers, who they are, and the channels that you'll be selling through. You need to make sure that the sales process is actually aligned to the new products and services. And now let's get into a little bit of the enablement layer. So we did discuss your talent and how you need to address the talent in the new order and prepare people to sell. You also started to touch upon technology and we discussed that they may need more tools in the future. So now I think it would be really interesting to have a conversation around the incentive compensation plan and assuming that we've got all these other things in order and we've looked at all those considerations, now we've got. You were selling headsets before. So let's discuss the challenge in you sold a product at that, you know, it was just a finite product that was being offered to the marketplace and now you're selling six SaaS software as a service, which I would suspect that there's a little internal change management around that as well. And then how that is translated into the incentive compensation plan.

I think when I really take a step Back and look at the compensation plans for the sales team that exist maybe 12, 18, 24 months ago they were revenue based galactic goals, looking at the company targets as a whole and a little bit of individual accountability. In the recent days, as we've started to sell SaaS and really dip our toe in the future of where we are going as a company, we've gone out and set goals for all of our salespeople to include this new offering. Then add in this new acquisition of Polycom where we can partner and deliver holistic solutions to our customers and partners. Our comp lever that we pull is definitely going to change. And I call it that specifically because I think of sales compensation as a lever, one of many tools in a toolbox to accomplish an end goal to drive and motivate your sales force and enable them to have success. And from a sales compensation perspective, moving from a straight revenue plan to something, whether it be solution selling or SaaS in the future, future is really challenging. You have no baseline, you don't know how to set goals. But you do know at a corporate level where you want to be. And between you and me, Michelle, that looks like, you know, I'm going to guess what my goal is going to be because this is what my board has told me it needs to be. Now Plantronics is much better than that. They've set goals that I think are realistic, but most companies are taking a very good guess at where they're going to go. So what we've done is change our compensation plans to have a duration of six months. Now that's really unusual in the marketplace. Most people set annual or fiscal year 12 month plans. We've decided that we're agile and moving so fast that it's better for us to communicate six months at a time knowing that we have changes rather than just changing midstream without notice. In doing that in our second half, we're going to have an opportunity to align SAS goals across all people that can sell SAS and revenue to keep the lights on with our core products.

So that makes me wonder about your quotas as you look at quota setting as well. Now what I'm hearing is you're going to change your plan a little bit. Do you have any insights as to what you're going to be doing first? And then maybe we'll talk about quotas.

Absolutely. So I'll tell you about where we're at now. We have a comp plan that's primarily based on revenue, similar to most of our competitors. And then we have a portion of our plan, called a KPM, a key performance measure, which other companies call MBOs measurement by objectives or KPIs key performance indicators. Everybody calls them something different. And that's where we were placing all of our strategic goals. Now that works when you don't have any history and you're not really quite sure what to do. So we're moving to a plan that says now we're a little bit smarter and we know a little bit more the direction we're going. We still don't have three years baseline to be able to set a realistic quota. Instead, we have 12 months history of starting to sell SAS. We know that this is one of the key future offerings of our company. So anyone that has the opportunity to sell SaaS, if they're tied to a customer or a market or a territory where SAS is available, will have that as a goal. And we're looking at it from a perspective of having a lever where if you sell on strategy, you will be able to maximize your earnings. If you sell in the old world, you'll still get paid, just not maximizing your earnings potential. So really what we're asking folks to do is both sell on strategy and meet your revenue number. In other words, let's keep the lights on and make sure that we can make it to the future too.

Well, that's great. So what you're doing is you're motivating them to sell the new products and services, but not penalizing them for keeping the lights on. And I'll tell the audience, when we've worked with some other companies, we've gone in to solve for that very problem. What they've done is they've gotten pretty hardcore on what the Wall street wants to see, for example. So Wall street wants to see SaaS. And the mistake that we've seen some organizations make, which appears that you are not, is that they'll have very specific goals around that particular offering when the reality is to your point, Juliet, there isn't that history of selling that particular product and service. So you're making a lot of, you know that guess that you're talking about the marketplace and what the demand is actually going to look like. So we go in and we're doing a lot of cleanup. You're being more thoughtful in the approach, not really knowing for sure what the market demand is going to be. So that leads me to ask about quotas. So what is the approach to quotas? That quota setting that you are looking at or considering, Juliet, as you move into the new fiscal Year.

Looking at quotas is always a twofold process. We have the annual operating plan, so we have this top down measure and then we need to do a bottoms up measure of opportunity. Not just what sits in the pipeline today, but really listening to our field and field management in terms of the opportunities they see for tomorrow. They're much closer to our customers and partners and have a much better outlook on what is reality. Now, of course there's always the third input where you can get total addressable market information from D and B. And so I've often been asked, how do you marry all of these different inputs and get to an output that's a realistic quota? So generally I take the tops down information disseminated by region and channel and product line. At the same time, I'm collecting a bottoms up forecast from the field. After we do a level of reconciliation to see if the bottoms up covers or exceeds the top down, then we know if we have a quota that people think will be achievable. Now, the truth is there's always going to be some stretch. So that comes back to my earlier comment around governance. Having quota governance is equally important to having governance over your plan design. And when I talk about quota governance, I sit on a committee with finance, hr, Legal and Sales management. Together we review all requests and strategic decisions around quota. So for example, when we take a quota number on a tops down basis, that means taking it from the annual operating plan. We have stretch guidelines past each of the regions. We may say something like leadership needs to take a 2 to 3% stretch over the AOP and frontline sellers will take a stretch of 3 to 5% over the AOP. And then when we do our roll up from the bottoms up, we make sure each of those stretch amounts are covered. But I do want to say to you, Michelle, that quotas and quota setting is really an art. People like to think it's a science, that it's a mathematical exercise of taking one big number and slicing it up into a million little pieces. The truth is you just can't peanut butter the number and really take into consideration the total addressable market, what the real and true opportunity is in each of the marketplaces that we operate in.

Well, thank you so much for that summary, Juliet. This has been extremely insightful and I so appreciate your time today. Is there any closing thoughts that you would like to leave the practitioners with people that are right in your shoes that maybe haven't made this transition that you're in the midst of? And any other closing thoughts you might.

Have, I would offer the thought to lean into your discomfort. This is going to be a time of change and gray space. And what that looks like for me is, you know, art meets science and really being able to communicate up, down, left and right that things are changing and it's going to be okay. Let's keep the lights on and move to the future. And we're going to be successful together. And comp is just one lever to get there. So to my fellow practitioners, be a business partner first and a comp professional second.

Thank you so much. Juliet. Again, thank you so much for your time today. And to all of you out there, we want to thank you for participating in our webcast. We hope this has been insightful for you and next steps. And now let's take action. So what can you do as you're preparing for sales comp season? We invite you to go to salesglobe.com and take the sales Compensation assessment. It's a report card. Just fill out a few simple questions and we'll give you advice on what you need to be considering as you look at your new fiscal year. You can also read what your CEO needs to know about sales compensation. That's available again on our website or through Amazon.com and finally, please feel free to contact us. Me or one of our practitioners here would be happy to get on a call with you and talk you through any of your particular challenges. And we look forward to you joining us for our next webcast in a couple of weeks. Again, thank you Juliet, for your time and thank you to all of you for participating and we'll see you the next time.