Jack Sweeney, Senior Contributor, CFO Network ||| Feb 28, 2020

For those finance chiefs who are apt to tweak their company’s sales compensation plan, Boomi CFO Carolyn Koehn has some curt advice: Stop. Or at least make your tweaks sparingly.

“If you want to lose sales and have the sales team off doing exercises in game theory or whatever, just keep changing your comp plan,” says Koehn, who served as vice president of finance, global sales compensation for the computer maker and storage company Dell until last year, when she stepped into the finance chief role at Boomi, a software-as-a-service (SaaS) company and Dell subsidiary.

 DELL TECHNOLOGIES

Part of the temptation to “tweak” is due to the numerous inputs that feed into most sales comp plans, Koehn explains. The finance chief’s admonition conjures a crowded control panel with dials that can be turned every which way.

“At Dell, we probably had 13 different inputs to calculate sales compensation and no salesperson cares where the tweaking error was made or who made it,” says Koehn, who believes that sales productivity is at risk when inputs are being  changed by different departments and functional groups within a company as well as different layers of management.

Koehn says that the sales team needs to get its marching orders from a single voice. “You have to have a team that owns sales compensation and knows how to reach into the organization to identify the problem, fix it, and be able to close that communication very quickly,” explains Koehn. She adds that the key measures of success for sales compensation remain, first of all, the alignment between the goals of the business and the goals of the sales team. Disrupt  the comp plan and Koehn warns that the sales team could be headed in a direction entirely unrelated to company goals. Koehn’s second key measure of success for a comp plan is sales productivity—which brings us back to her admonition.

“I think that sales productivity is achieved by trying to keep the compensation plan as consistent as you can and, when you do have changes, try to keep them as simple as possible,” observes Koehn, who says that while most comp calculations involve obvious numbers such as sales quotas and the dollar value of orders, the complexity quickly escalates when you factor in the overlapping sales rep assignments inside large customers and the bigger commissions offered by some products over others.

“You can imagine that in a product portfolio as big as Dell’s, there are a lot of opportunities to get it right, but there are also a lot of opportunities where errors can creep in,” adds Koehn, who notes that calculating commissions for salespeople becomes even more challenging when human resources data is added to the mix.

“When was the salesperson’s start date? When was their stop date? Did they get a pay raise? All of these elements usually aren't something that is necessarily top-of-mind, but get them wrong and you will certainly get commission payments incorrect,” emphasizes Koehn.

Before accepting the CFO role at Boomi, Koehn says she had begun to look for future finance leadership roles that could provide broader management experience – the kind of experience that would someday make her an attractive candidate for outside board positions.

“Several folks approached me about the Boomi opportunity and I thought about what I could bring to the role and what it offered me in return,” explains Koehn, who says from a personal development perspective Boomi ultimately transported her to a new land of opportunity. After spending most all of her career helping to grow hardware and infrastructure technology businesses, Koehn had found a quick door of entry into the software-as-a-service business.

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Source: Forbes

https://www.forbes.com/sites/jacksweeney/2020/02/28/boomi-cfo-says-that-sales-productivity-often-suffers-a-death-of-a-thousand-tweaks/#1265c081cc48