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Simple or Complex? Different Approaches to Sales Compensation Plans

In a previous post, I quoted a survey that found out most companies view the complexity of their compensation plans as an obstacle. And in fact, a lot of organizations are working towards a simpler and standardized sales compensation plans. However, it seems like the views of the sales managers are at odds with those of the Chief Financial Officers, the top financial figure of an organization.

A survey conducted by CFO Research asked the following question: In your opinion, which of the following sales management improvements would be most likely to help your company reach its goals over the next two years? An overwhelming number (61%) responded by saying that more sophisticated selling behaviors are the solution. Such behaviors include selling to meet profitable targets, team selling and cross-selling. So while many Chief Strategy Officers consider their sales compensation plans to be too complex, too confusing and too rigid, and are pursuing simpler plans that will encourage simpler selling behavior – the CFOs pursue the exact opposite.

Although, when asked if they expect their sales incentive compensation plans to become at least somewhat more complex over the next two years, only 37% acknowledged that possibility and only 6% confirmed that their company’s sales compensation plan is likely to become more complex.

In the end, the goals of the CFO and the CSO to make profit are similar, but their conflicting views might hurt their shared interest. When two strong forces pull in opposite directions, what they’re trying to move might just stay motionless. This conflict of interests’ effects more than just sales tactics and behaviors, it also has implications on sales self-service, BI roles, sales targets, sales technology and more.  When considering how to execute strategy and improve organizational alignments, CFOs and CSOs need to make sure that they are first and foremost aligned.

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