Depending on how small or large your organization is, you may just be approaching the question of who owns sales compensation. The formation, management, and administration of sales compensation may seem like it would fall to sales management, but as your organization evolves, you’ll find that more departments have stakes in the sales compensation program.

Who Owns Sales Compensation in Your Organization?

Because the pursuit of revenue touches so many parts of the organization, the way sales people are compensated affects these departments, and those affected should have a voice in the development and management of sales compensation. So who are these key stakeholders?

• Sales – Most obviously, the sales director or manager should be involved in developing and guiding sales compensation. They will have the hands-on knowledge of sales processes and what it takes to motivate and reward the sales team.
• Operations – As the group responsible for the actual product or service your organization is providing, operations plays a part in the sales process either indirectly or directly, sometimes involving product or service demos to help move a deal along to closure.
• Finance – Another obvious stakeholder is financial leadership as they will be able to offer budgetary guidance and objectives when creating the sales compensation plan.
• Human Resources – You’ll want a voice at the table who is there to keep decisions rooted in organizational values and philosophy as well as consider the needs of the employees and external competitive practices.

Representatives from each of these departments can be brought together to form a governance committee.

What does the governance committee do?

You may be wondering why you need a committee once a sales compensation plan has been developed. Roles beyond forming a compensation philosophy and plan include:

• Regularly assessing the effectiveness and fairness of the plan and evolving it while adhering to the organization’s compensation philosophy.
• Making decisions regarding compensation disputes or situations that weren’t accounted for in the original documentation.
• Determining and approving exceptions to the regular compensation program and processes.
• Creating a regular structure and process for reviewing and assessing the compensation plan.
• Creating and managing the decision-making structure in terms of who makes which decisions and with what level of authority.

Sales compensation, by its nature, will never be a set-it-and-forget-it program. There are too many factors at play and too many changes that occur both within an organization and the market overall. So having a governance committee with members representing different aspects of your organization is essential to keeping the comp plan relevant, functional, and fair.