Who owns compensation planning in 2023?
The question of who owns compensation planning has grown increasingly puzzling amid organizational restructuring.
Should Finance, Sales, RevOps, HR, or a mix of all four own it?
Turns out, this will depend entirely on the stage and setup of your organization.
We found in our 2023 Sales Compensation Trends survey at early-stage companies, sales leadership most often owns the process. But as organizations grow, this responsibility shifts to RevOps teams.
Additionally, we found that reps’ trust oscillates based on who builds their compensation plans. For instance, our survey indicated that reps trust sales comp plans the most when built by sales leadership. RevOps-led plans have the second most trust, and Finance with the least.
Still, we believe RevOps should take the lead if your organization includes a RevOps department. RevOps knows the data, sales behaviors, motivators, and business context more than say, Finance.
If you don’t have a RevOps department yet, then Sales should take the lead.
But that’s not to say building comp plans should be done in a silo. The best comp plans feature collaboration from Sales and Finance, even HR, as the plan nears finalization.
Below, we outline how to involve each department.
Involve HR in compensation planning
Your human resources department will likely have the least amount of knowledge when it comes to the intricate comp plan mechanics of your compensation structure. However, HR can play an impactful role in providing industry rates on OTEs and salary structures.
“Ninety percent of the battles I’ve seen unfold during the comp plan design phase occur over leaders not believing how much companies are paying their reps,” said Kevin McKeown, CRO at Beekeeper, in 4 sales compensation best practices to help you for 2023.
It’s absolutely worth your time to bring HR into the conversation early on to ensure your sales compensation packages are competitive. From there, you can work backward in designating commission rates and quotas.
Additional Reading: Why gathering rep feedback on sales compensation plans is a RevOps must
Get a pulse check from Finance
Before you begin drafting your compensation design, consider having a philosophical conversation with your Finance leaders about what you hope to achieve with the new plans.
“I’m coming to the table with the behaviors I’m trying to motivate and some ideas about what I think could motivate those behaviors,” said Sales Consultant Caroline Tarpey, in How Sales and Finance can work better together this comp plan season.
This step provides an immediate pulse check to see how feasible (or off base) your initial thoughts are.
QuotaPath VP of Finance Ryan Macia agreed.
“I prefer when Sales comes to us with options and pre-proposals,” Ryan said. “I don’t like starting from scratch. If you can come to me with some concepts that you think will motivate the team, then we can determine if it will break the bottom line.”
But don’t lean too heavily on Finance’s initial inputs.
“When the Finance team gets too involved, they tend to think about everything from just the cost perspective,” said Kevin. “Comp planning usually goes sideways when someone without a sales mindset is driving the process.”
So, have early conversations about what you’re aiming to achieve with Finance, then begin to shape your sales compensation strategy from there.
Another way to work well with Finance throughout this process is to run your own pressure tests before handing proposals to them. If you can break the plan ahead of time, you’re saving both yours and Finance’s time.
What about the entire commission process?
Once you have the plans in motion, which team owns the payout process, plan, and roster changes?
This will likely fall to RevOps, Finance, or a combination of both.
Most of our admin users who run QuotaPath have an Ops background, be it Sales, Finance, or RevOps.
And at QuotaPath, our RevOps team owns the commission calculations and plan adjustments. All of which is made easier using our own commission tracking software.
Then, Accounting takes it over for actual commission check payouts.
So, is the answer RevOps?
Yes — and.
If your company includes a RevOps department, RevOps (in close partnership with Sales) should own the comp plan design.
As for who owns commissions once the plan is in play, we, too, think that RevOps should own the process up until payout.
Need help with your compensation plan?
We’ve got free resources to help with compensation planning. Start by visiting Compensation Hub, an ungated library of 20 comp plan templates that you can customize and adjust to your business model.
From there, automate your commission tracking, by saving your plan in QuotaPath and kicking off a free 30-day trial.
Just want to learn more about automating sales compensation management? Chat with us by scheduling a time with our team.