A compensation plan is a strategical element in a direct selling operation. And compensation plans, too might need modifications in time. This is so natural and management must be prepared at least mentally, for such a change from the very beginning.
However, this is a very important step. This is because the choices you make here not only change how your commissions budget is allocated among the organization. It also has a strong impact on how your organization will behave and will re-shape the profile of your organization. On top of these, any changes you make after you have launched your plan will create suspicions on the field and and they have the power of demotivating your network considerably.
In order to minimize the potential risks, make sure you ask the following six questions:
1) Is this change a real necessity?
Weigh the pros and cons of the plan modification prudently. If you have any doubts that the change is not a real necessity, I would highly recommend not to proceed any further.
2) When was your last plan change?
Frequent changes can end up with the most undesirable results even if they were to the benefit of all in nature. Allow the necessary time for the organization to digest the changes before launching another.
3) How will your overall commissions budget be impacted?
Have you calculated the theoretical maximum and your real payout well? Is your total budget has room for an increase? If you are planning to decrease your commissions budget, think twice. This can have a fatal impact on the field.
4) Are you planning to incentivize a segment (or a behaviour) more than the others?
If this is the case, this means your organization will behave differently. And in a short while, you will have a network consisting of different people with a different mentality. Make sure this is what you have aimed for.
5) Have you prepared your communications plan?
The best planned modification in the world can turn into a disaster if it is poorly communicated. From your top leaders down to the part-timers, the whole organization must be informed of the changes. All should know why this has been done and what would it mean to them in terms of their businesses.
6) Is your timing the best?
Regardless of how well you are prepared in all aspects, the change can be a huge failure, if it is not launched at the right time. A plan change that goes live in an already very busy period for instance, most probably will not bring in the desired results. The timing should also be such that the organization will have sufficient time to adapt and help their downlines adapt, too.
All compensation plans might necessitate modifications. The process here should never be overlooked, though. Success can only come through well-planning and well-execution.