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Five Tips for Building a Disaster Relief Policy for your Sales Incentive Compensation Plan
Nov 08, 2023
This past summer, many parts of the world experienced disasters both natural and man-made. Loss of life and damage to property resulting from these events have received extensive media coverage. Due to this attention, a number of customers have asked us for guidance on designing policies and business rules to address the potential impacts that disasters can have on field sales incentive compensation (IC). IQVIA offers five tips to help you build an IC-related disaster policy for your organization. We strongly recommend a policy be designed before a disaster strikes.
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Define eligibility criteria and a establish a process for determining impact
When creating the eligibility criteria for sales reps to receive disaster relief, consider factors such as the location of the sales rep, whether they were directly affected by the disaster, and the extent of the impact on their ability to perform their sales responsibilities.
- It is helpful to refer to objective sources such as: sales data trends before, during, and after the event; government-issued disaster declarations (in the United States these declarations are often defined geographically by ZIP code or county); call data showing the impact on customer access; etc.
- Naturally, first thoughts turn to the reps located in the actual disaster zone, but potential supply chain impacts may also arise. If a manufacturing or distribution site is impacted, many territories outside the disaster zone may also be affected. That situation could take time to become apparent.
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Identify and assess relief options
Depending on the design of your IC plan, relief might take the form(s) of direct financial assistance, temporary changes to sales quotas, or other forms of support based on the specific needs of affected sales reps. We recommend some flexibility in how you offer disaster relief so your policy can accommodate different circumstances. For example, duration of relief may not be the same for all impacted reps – some areas may recover from a natural disaster, like a storm or wildfire, more quickly than others.
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Implement consistent and fair decisions
Due to the potentially traumatic nature of a disaster, it is critical that relief payments are consistent and fair, with no perception of favoritism or bias. However, this can be complicated by the desire to act quickly to help impacted reps as soon as possible. For most companies, a critical step to ensure fairness is having their IC Steering Committee review and approve both the underlying policies and the relief payments themselves. However, present-day decisions about relief can impact the future. Consider answers to situations such as:
- If a territory’s sales experience a trend break due to a disaster, how will fair goals be set for future pay periods?
- What impact will disaster relief have on annual award programs (i.e., President’s Club), contests, performance evaluations, or competitive sales metrics such as rankings?
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Build lines of communication
Be sure to communicate your company’s policy to your sales reps so they are aware of the support available in case of a disaster. Establish a mechanism for sales reps to report their situation and request relief. Identify a dedicated point of contact who can coordinate a response.
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Consider legal and tax implications
Consult with your Legal team to ensure that relief payments comply with relevant laws and regulations, and be aware of tax liability and other financial considerations for your sales reps. For example, payments may affect their eligibility for government-based assistance programs.
Finally, it's important to review and update your disaster relief policy periodically to reflect changes to your incentive compensation plan design and the evolving needs of your sales team.
Every organization has unique requirements and considerations related to its field sales incentive compensation program. These tips should be adapted to fit your specific needs. Could your organization benefit from an independent perspective on how your IC program handles disaster events?
Are you interested in learning more about how your company’s approach matches up to those of your peers? Please connect with us to discuss how IQVIA could help your organization with its IC program, or if you have any questions about the topics addressed in this blog.
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