Navigating the Complexities of Sales Compensation, with Experts

Kat Walenty, a seasoned compensation expert with over a decade of experience in sales compensation, describes herself as a proficient human resources leader with a proven track record of supporting mid-size, high-growth organizations. As the Senior Manager of Compensation, Incentives Strategy, and Operations at HubSpot—a leading name in the tech and CRM space—Kat has a wealth of expertise and enthusiasm for optimizing compensation structures within the tech industry. Her role at HubSpot and her dedication to refining compensation practices make her an invaluable guest on the show.

In a conversation with Nabeil Alazzam, Kat navigates the various complexities of sales compensation. She discusses the importance of intentional and consistent actions as a sales compensation leader, explores the role of empathy in managing compensation plans, and delves into the impact simple adjustments to a compensation structure can have on sales rep behavior.

Listen to this episode of The Sales Compensation Show to learn:

• The importance of intentionality and consistency as a sales comp leader
• How to take an empathetic approach to your sales comp planning
• The impact small changes to your comp plan have on sales rep behavior

Three key takeaways:

#1: Be intentional and consistent with your approach

Designing effective changes to sales compensation plans requires a thoughtful approach centered on intentionality and consistency within an organization. Intentionality emphasizes the importance of having a clear purpose behind any changes to the compensation structure. To achieve this, organizations must deeply understand their business objectives, market dynamics, and the desired outcomes of the revised plans. Intentionality ensures that modifications align with strategic goals, instilling a sense of purpose and direction among sales teams.

Equally important is the role of consistency in sales compensation plans, fostering a fair and transparent environment. Applying consistent compensation rules across the sales force builds trust and credibility, creating a positive and motivated work culture. When sales professionals perceive fairness and consistency, it promotes predictability in earnings, facilitating better financial planning. Furthermore, consistent practices contribute to the long-term success of the organization by establishing a stable and reliable framework for sales performance and compensation.

"Consistency is key. The more stability you have, the more likely your salespeople are to adopt intended behaviors." - Kat Walenty, HubSpot

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Kat emphasized the significance of intentionality over change for the sake of change. She enforced the idea that an intentional approach to adjustments is critical, contrasting it with the common notion that incentives are the driving force behind everything, leading to frequent changes in compensation plans. She advocated for a “less is more” philosophy, arguing that stability fosters a more comfortable environment for the sales team. According to her, consistency is the key to preventing chaos and confusion among the sales force, urging a more straightforward and reliable approach to compensation.

#2: Take an empathetic approach to sales compensation

Empathy is a critical in sales compensation, as it plays a pivotal role in understanding the needs, motivations, and concerns of both the sales force and the organization. In sales comp, where intricate structures and financial incentives drive performance, having empathy enables professionals to establish meaningful connections with sales teams. Understanding the diverse backgrounds, aspirations, and challenges of individual sales reps allows for the design of compensation plans that are not only competitive but also resonate with the unique circumstances of each team member.

At HubSpot, the emphasis on empathy in sales compensation planning is a cornerstone of their approach. Kat shared an innovative practice known as the “emoji chart,” where they assign representative perceptions using emojis to guide communication strategies for operational changes, including compensation, quotas, and territories. By considering how reps will react emotionally to news, they tailor their messaging to highlight what’s in it for the individual seller. This process, introduced by their sales leader’s Chief of Staff, prioritizes putting oneself in the shoes of the sales team, ensuring that the communication not only makes logical sense but also resonates emotionally.

"Sales compensation is not about numbers or calculations. It's about how the plan translates into the livelihood of your reps." - Nabeil Alazzam, Forma.ai

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Nabeil echoed the importance of empathy in sales comp, emphasizing that the topic is emotionally charged as it directly impacts someone’s livelihood. He stressed the need for sellers to not just understand the logic behind compensation changes but to feel good about them.

This sentiment aligned with Kat’s experience in a previous role, where a shift from focusing solely on the mathematics of comp to understanding the emotional impact on a sales rep’s life proved to be a pivotal moment. The realization that a great compensation plan is only effective if it can be understood and explained in a meaningful way to those affected by it underscores the importance of empathy in crafting successful sales compensation strategies.

#3: Small changes to a compensation plan can drive big results

Kat emphasized the impact that seemingly small adjustments in the sales compensation structure can have on the behavior of sales reps. In her experience, the most rewarding aspect of her role is when she implements a change that doesn’t necessarily attract attention from others but brings about a significant transformation. These subtle adjustments may not immediately appear to have a massive impact on individual sales reps, but they can significantly alter behavior in a way that benefits both the organization and the sales team.

Nabeil agreed with this sentiment, highlighting the necessity of being intimately connected to the business and understanding the intricacies of what motivates sales professionals. He noted the distinctive challenge in sales compared to other roles, emphasizing the need to comprehend not just the metrics but the underlying drivers that influence a seller’s decision-making.

"A simple change to a comp structure can drive a massive lift." - Nabeil Alazzam, Forma.ai

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Both speakers agreed that when a change is made with a deep understanding of these dynamics, the impact on incentives and, consequently, the behavior of sales reps can be immense. Even simple adjustments can ripple through the organization, impacting the mindset, priorities, and dedication of sales reps, ultimately driving enhanced performance aligned with the company’s strategic goals.

The Sales Compensation Show is brought to you by Forma.ai, the world’s first sales compensation platform designed around the agile methodology of CompOps. Find us by searching “sales compensation” on Apple Podcasts, Spotify, YouTube, and other streaming services.

To learn more about how Forma.ai can help design, execute, and optimize your sales comp strategy, start a conversation with us today.