Incentive management, by and large, is a six-step process. Let’s explore them!

The process of commission provisioning starts with goal setting. This is the step where you decide why and on what basis you give commissions to your employees. For example, you can decide to provision commission for the following accomplishments:

These are achievements that often involve winning strategies, pursuit, and real ground work. As a business, you can decide based on which of such accomplishments, you are willing to provide commissions for. Therefore, goal setting becomes an important step to set your direction.

A commission plan is the process of defining your terms and preferences for computing commissions. You can define when and how you want to issue commissions: If after each successful transaction or upon attaining set target or quota, if to the deal’s total amount or for each line item.

Commission structure is about creating the compensation model itself. It is that stage where you decide the commission percentage, calculation method, tiers, and value. The commission plan will be executed based on this structure.

Many a times, to offer good customer experience, businesses have a post-sales return, replacement, or cancellation window. This is a convenience that can help retain customers and build their trust. However, at the back stage, the particular product or service would have already completed the sales cycle and the commissions would have been processed for the agents, making those completed transactions invalid or presented with altered transaction value. This is a discrepancy that businesses need to handle retroactively by rebalancing the difference or clawback commissions for the nullified sale, altogether.

This ensures fairness for both business and the employees.

Although the commission structures are defined with parameters, sharing businesses’ stakes with employees requires a higher-order approval. An approver will most likely be a sales manager, sales leaders, revenue operation teams, or finance and accounting teams.

Although, many a times, sales reps are incentivized along with their salary, a commission need not always be issued along with the salary. Some companies issue monthly, and some yearly. So, at the last leg of the lifecycle, sits the decision of when to clear out the payouts.

Provisioning commissions involves two layers: Administration and execution

Administering incentives requires designing the entire lifecycle of sales commissions according to your business objectives and terms. This is often called Commission Planning.

Executing incentives involves recording, approval and distribution of approved payouts to the sales representatives as part of tracking and book keeping.