Ziad Y. Khoury, founder of Frontline Performance Group and author of Frontline Profit Machine, describes in his new book a business blueprint that promotes the adoption of a performance management system and three areas of actionable focus: the Right Environment, the Right Fit, and the Right Action. These three elements are interdependent parts of the Khoury Performance Equation, or KPE.

The Right Environment describes the eight essential elements necessary to put a positive, service-based sales culture in place. The Right Fit, or recruitment part of the formula, ensures the right people are in place. The Right Action refers to best practice standards, a comprehensive training process, clearly defined performance metrics, and workplace motivation.

Workplace motivation is a key consideration when establishing an effective performance management system and demands ongoing focus on three related human drivers and desires: compensation, recognition and accountability. Although each is important to creating and maintaining workplace motivation, let’s specifically address compensation and its role in building a performance management system that can help your company achieve peak performance potential.

The key metric when developing a performance management system is not what you pay; it is instead, the sales revenue generated by your employees and what you end up keeping as company profit. Here are a few basics to remember when creating an effective, performance-based compensation plan:

* Base pay should not exceed 50% of total compensation – base pay provides the ability to pay for basic necessities of survival, with the balance (commission) accounting for a desired increased standard of living.
* Keep it simple – if a salesperson cannot calculate their current commission earnings in five minutes or less, it is too complex.
* Tier it but make it attainable – the right plan needs to be realistic and based on a sliding scale that translates into more money as performance increases.
* Be generous – Your top producers are worth it. Pay them well or they will be producing for someone else, maybe the competition! Remember, it’s not how much they make; it’s how much they make for you that really matters.

By implementing a performance management system that rewards your top producers and inspires others to do better, you will better position your business for sales success.

For additional information on performance management systems, please visit www.frontlineprofitmachine.com. To learn more about Frontline Performance Group, please visit www.frontlineperformancegroup.com.