If you are thinking about changing your direct selling company’s compensation plan you need to know about the inevitability of winners and losers.
Winners are the people who are going to earn more as a result of your changes. Losers are those who will earn less.
Why Have Losers?
Whenever a compensation plan is changed, unless you are only increasing compensation, there will always be some people who will earn less under the new plan than under the old plan.
While you may have identified the reasons for your compensation plan change and the goals to be met as a result of the changes, add to your list the following goals you may have missed:
- Minimize the number of losers.
- Minimize the amount of loss.
Why Minimize Losers?
How would you feel if your boss cut your pay? Would you be as motivated to work harder than before? Most of us would not be.
By adjusting the rules of the new compensation plan and comparing the income of each representative under the old plan and the proposed new plan, you will be able to see quantitatively how many losers there are and how much loss they will be experiencing.
While we can accept there will be some losers, it is unacceptable to not worry about them or skip the analysis work to minimize the extent of loss.
Steps For Successful Compensation Plan Changes
Watch this video to learn all the steps you should follow when you are changing your compensation plan.
Want to know more? Here are several articles that explain more about compensation plan changes: