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Sales Compensation Plans for Millennials

Sales Compensation Plans


Building an effective sales compensation plan that is well suited to the needs of your business and your employees is no easy feat. And now with millennials holding the place as the largest generation in the workforce, many businesses are coming to realise that they need to go back to the drawing board when it comes to shaping their sales compensation.

In this article, sales comp expert David Johnston takes a look at sales compensation plan options for millennials.

There are a couple of key factors that must be kept in mind when addressing the sales compensation needs of the millennial generation. First and foremost, while there are trends, they do not necessarily define the whole generation. The principles of incentive compensation including motivation, recognition and performance expectation all have individual value and definition that mean different things to different people including those in the same generational group.

Therefore, one plan cannot fit for all Millenials. Secondly, while this group are the largest workforce group, they are not the only generational group within the sales force. Many companies are struggling to service the needs of a multi-generational sales organization with different expectations, goals and attitudes. Designing for only one group means that you may be ignoring the needs of other valuable sales  resources.


managing millennials in sales


Millennials like recognition. For better or for worse, the millennial generation is one that has grown up with a lot of positive reinforcement. It’s an old joke now that millennials all went home with participation medals after sporting events at school… but there’s an element of truth in this zinger. Millennials have a need to feel appreciated and recognised for their work  – a recent Gallup survey found that this generation performed best when they received feedback and praise every seven days… Therefore, a big part of success in creating the best sales compensation plan for the millennials in your sales team is rewarding them with regular recognition as well as financial rewards.

Another big element to creating the best sales compensation plan for millennials is clarity. For younger millennials, clear and concise plans are effective because the employee is likely fairly new to the workforce. Therefore it makes sense that the best sales compensation plans for these guys are simple and easy to understand. But what about older millennials? Let’s not forget that in 2018, your mid-30s workers are millennials too and these employees also seem to appreciate clarity. Why? Well, another Gallup survey might hold some answers. The survey found that 71% of older generations strongly agree they know how to prioritize responsibilities, compared to only 54% of millennial employees. For whatever reason, millennials don’t find it as easy to prioritize their workflow as their older counterparts meaning that if you want your sales compensation plan to be effective for millennials, it has to explain what’s expected of them – and how they are going to earn their compensation – in no uncertain terms.

Millennials as a group do not like risk. Many have seen a parent, relative or family friend suffer financially through layoff or termination. As a result, they want the security of a base salary to cover their obligations, as well as a significant incentive opportunity to allow them to optimize their earnings expectations.  The last piece of the puzzle follows on from these two elements: Millennials respond to achievable targets that are within the line of sight. Because of their preference for immediate reward and regular recognition, as well as a desire for clarity, millennials respond best when their targets seem attainable in the near-future, as opposed to longer-term goals (that may change over time).

So when it comes to the best sales compensation plan for millennials, you need to focus on recognition, not just rewards; you need to make the plan clear and concise; and you need to include a base salary and incentive with achievable targets that are a simple roadmap to success.


About The Author

David Johnston is President and CEO of Sales Resource Group Inc. David has a broad international consulting background and offers experience and a participative approach to consulting with clients. He brings with him 20 plus years of experience in working with organizations from diverse fields, such as broadcast media, pharmaceuticals, telecommunications, information technology, retail, manufacturing, membership organizations and financial services. David is a sought-after speaker in the area of sales performance management and organization effectiveness as well as sales compensation. David holds Masters Degrees in Clinical Psychology and Business Administration. He teaches sales compensation for WorldatWork and is a member of The Canadian Professional Sales Association.


This article was first published in The HR Gazette.

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