This past summer, many parts of the world experienced disasters both natural and man-made. The loss of life and damage to property resulting from these events received extensive media coverage. Because of this consideration, a number of clients have asked us for guidance on designing policies and business rules to address the potential impacts that disasters can have on field incentive compensation (IC). IQVIA offers five tips to help you build an IC-related disaster policy for your organization. We strongly recommend designing a policy before disaster strikes.
Define eligibility criteria and establish a process for determining impact
When creating eligibility criteria for sales representatives to receive disaster assistance, consider factors such as the sales representative’s location, whether they were directly affected by the disaster, and the extent of the impact on their ability to perform their sales responsibilities.
It is useful to refer to objective sources such as: trends in sales data 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 representatives located in the actual disaster zone, but potential supply chain impacts may also arise. If a manufacturing or distribution site is affected, many territories outside the disaster zone may also be affected. That situation may take time to become apparent.
Identify and evaluate assistance options
Depending on the design of your IC plan, relief may take the form(s) of direct financial assistance, temporary changes in sales quotas, or other forms of support based on the specific needs of the affected sales representatives. We recommend some flexibility in how you offer disaster assistance so that your policy can fit different circumstances. For example, the duration of relief may not be the same for all affected representatives—some areas may recover from a natural disaster, such as a storm or wildfire, more quickly than others.
Enforce consistent and fair decisions
Due to the potentially traumatic nature of a disaster, it is critical that aid payments are consistent and fair, without the perception of favoritism or bias. However, this can be complicated by the desire to act quickly to help affected representatives as soon as possible. For most companies, a critical step to ensure fairness is for their IC Steering Committee to review and approve both the underlying policies and the assistance payments themselves. However, today’s aid decisions can affect the future. Consider responses to situations such as:
- If territory sales experience a break in trend due to a disaster, how will fair targets be set for future pay periods?
- What impact will disaster relief have on annual awards programs (ie, the President’s Club), contests, performance evaluations, or competitive sales metrics such as rankings?
Build lines of communication
Be sure to communicate your company policy with your sales representatives so they are aware of the support available in the event of a disaster. Establish a mechanism for sales reps to report their situation and seek relief. Identify a dedicated point of contact who can coordinate the response.
Consider the legal and tax implications
Consult with your legal team to ensure that facilitation payments comply with relevant laws and regulations and to be aware of tax liability and other financial considerations for your sales representatives. For example, payments may affect their eligibility for government assistance programs.
Finally, it is important to periodically review and update your disaster relief policy to reflect changes in the design of your incentive compensation plan and the evolving needs of your sales team.
Each organization has unique requirements and considerations related to its field sales incentive compensation program. These tips should be adapted to suit your specific needs. Could your organization benefit from an independent perspective on how your IC program handles disaster events?
Interested in learning more about how your company’s approach stacks up against those of your peers? Please connect with us to discuss how IQVIA can help your organization with its IC program or if you have any questions about the topics covered in this blog.
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