Five Tips for Developing a Disaster Relief Policy for Your Sales Incentive Compensation Plan

Last summer, many parts of the world experienced natural and man-made disasters. The loss of life and material damage resulting from these events received widespread media coverage. As a result of this attention, a number of clients have asked us for advice on designing business policies and rules to address the potential impacts that disasters can have on sales incentive (CI) pay in the field. IQVIA offers five tips to help you develop an IC disaster policy for your organization. We strongly recommend that a policy be developed before a disaster occurs.

1. Define eligibility criteria and establish a process to determine impact
   

   When creating eligibility criteria for salespeople to receive disaster relief, consider factors such as the salesperson’s location, whether they were directly affected by the disaster, and the extent of the disaster relief. impact on its ability to carry out its commercial 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 impact on customer access; etc.

   • Naturally, first thoughts turn to representatives located in the disaster area, 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. This situation may take time to manifest itself.
2. Identify and evaluate relief options
   

   Depending on the design of your IC plan, relief may take the form of one or more forms of direct financial assistance, temporary changes to sales quotas, or other forms of support based on the specific needs of the affected salespeople. We recommend flexibility in how you provide disaster relief so that your policy can adapt to 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.

3. Implement consistent and fair decisions
   

   Due to the potentially traumatic nature of a disaster, it is essential that relief payments are consistent and equitable, without any perception of favoritism or bias. However, this can be complicated by the desire to act quickly to help affected salespeople as quickly as possible. For most companies, a crucial step in ensuring fairness is to have their IC Steering Committee review and approve both the underlying policies and the relief payments themselves. However, today’s decisions about relief can impact the future. Consider responses to situations such as:

   • If a territory’s sales experience a break in trend due to a disaster, how do you set fair goals for future pay periods?
   • How will disaster relief impact annual awards programs (i.e. President’s Club), competitions, performance reviews, or competitive sales metrics such as rankings?
4. Build lines of communication
   

   Be sure to communicate your company policy to your salespeople so they are aware of the assistance available in the event 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.

5. Consider legal and tax implications
   

   Consult with your legal team to ensure relief payments comply with applicable laws and regulations, and be aware of tax liability and other financial considerations for your salespeople. 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 to your incentive compensation plan design and the evolving needs of your sales team.

Every organization has unique requirements and considerations related to their field sales incentive program. This advice should be tailored to your specific needs. Could your organization benefit from an independent perspective on how your IC program manages disaster events?

Would you like to learn more about how your company’s approach matches that of your peers? Please contact us to discuss how IQVIA could help your organization with its IC program, or if you have any questions about the topics covered in this blog.