Dear Calcy: Alignment Best Practices for Finance & Sales

Dear Calcy,

As our business enters a new growth stage, our comp team (which lives under Finance) is working much more closely with sales leadership and reps – but we’re struggling with how to best map out responsibilities, keep reps informed and motivated, and share learnings effectively.

Any advice for how to approach this?

Sincerely,

Looking for Alignment

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Dear Looking for Alignment,

A strong partnership between sales and finance teams enables businesses to design and implement incentive plans that motivate sellers and drive results. But navigating cross-functional relationships leads to many questions, even for the most seasoned finance professionals. It’s not unusual to ask:

• Who owns the ICM process? 
• Are your incentives motivating sellers to do their best work? 
• How should you work with AEs and sales leadership? 
• How is your ICM program impacting the bottom line?

All that to say, you’re not alone in wondering how to build a better working relationship with your sales counterparts. 

Here are some best practices to help you keep your finance and sales teams in lockstep.

1. Set clear ICM roles and responsibilities

Finance should typically take the lead in creating and designing incentive compensation plans. 

They’re often closer to board and business priorities, so they can ensure the commission plan aligns with organizational goals.

Once finance has taken the first go at designing incentive compensation plans, it’s time to involve sales in the process. 

Make it easy for sales leadership to see how different levers affect commission outcomes. Then, give front-line sales managers the time and space to share their plan feedback. As mentioned above, a more collaborative ICM process drives stronger business results. 

But the collaboration doesn’t stop there. Approving commission payments should also be a cross-functional effort. We recommend involving both finance and sales teams in the approval process since each team brings a unique perspective. Finance leaders can validate the accuracy of commissions and if the process they designed worked as expected, and sales leadership can assess seller performance. 

2. Motivate sellers with pay transparency 

You’ve designed a solid ICM program, but it’s not time to sit back and relax. Finance teams also need to motivate sellers with transparent and accurate pay insights.

According to our recent State of Incentive Compensation Management Report, 85% of survey respondents said that reps who have visibility into their compensation performance are more motivated. It makes sense – reps who understand the “why” behind their pay are more likely to be excited to contribute to critical organizational goals. 

Conversely, if seller expectations don’t align with their paycheck, it’s easy for them to lose trust in the process. As a finance leader, it’s essential to ensure you’re providing correct and detailed pay information to reps. And, don’t forget to check in with sellers frequently to see if there are any gaps in expectations before they lose trust in the system, and therefore motivation. 

Bottom line: Visibility creates trust, and trust encourages sellers to achieve personal and business goals. Finance leaders should work closely with reps to drive a more transparent and successful ICM program. 

3. Gather insights and share learnings 

The final piece of the puzzle? 

Reviewing relevant metrics and discussing them with sales stakeholders so you can learn and make improvements to your incentive compensation program. 

Along with program efficiency metrics such as commissions accuracy and time-to-payroll (both of which impact transparency and trust – and thereby motivation), here are some metrics that can help you determine your incentive program’s impact on reps:

• Win rate
• Average deal size
• Average deal length
• % of reps hitting quota
• Revenue growth
• Individual and team-level attainment
• Deal velocity

Using a combination of the above metrics most relevant to your business, you can create reports with varying degrees of information for different stakeholders.

We suggest building summary reports as well as more detailed reports. Doing so ensures your sales counterparts won't be overwhelmed by information while giving them the option to dive a layer deeper if they want. Slicing and dicing the data in different ways will enable both reps and VPs of Sales to get the insights they need. 

For example, a sales rep may want to view a high-level summary of their pay and drill down into the details to understand the "why". Leadership will likely want to see key takeaways and specific insights on attainment_, how the team is performing, and if incentives are motivating reps.

With digestible and accurate reports, you can work with sales leadership to identify gaps in the program and which sellers are missing their targets and why.

Building a stronger relationship with your sales team may seem daunting, but by following the steps above, you can create a more effective partnership in no time. Best of luck, Looking for Alignment!