How Do You Create an Effective Incentive Plan for a Business Development Manager? Seeking Advice!

Hello, I am working with a software company, and the management has recently decided to recruit a Business Development Manager. I have been asked to develop an incentive plan for the BDM, based on the business they bring to the company. I understand that incentive plans vary from company to company, and since I have not dealt with this before, I am unsure how to proceed. I would be grateful if you could share your company's incentive structure or provide guidelines to create one for my company.

Regards.

I suggest you first start with KRA for the Position followed by KPI. When you have agreed on KPI, you need to ask the stakeholder what additional factor in the KPI will impress them regarding the candidate's performance. When they mention that it will be the incentive plan, that's your cue.

An example from my past company: the KPI for a Business Development Manager was to meet at least 5 prospects per quarter, convert at least 2 prospects into proposals per quarter, and secure at least 1 win semi-annually. The incentive plan was structured as follows: achievement less than 50% received no incentive, 50%-70% achieved a 50% incentive, and so forth. The incentive payable was 5% of Gross revenue.

If you want to add more challenges, consider introducing the Balanced Scorecard (BSC). I recommend implementing the BSC once the employee joins. If I were in your position, I would introduce it when the candidate starts and define it with them, their manager, and align it with the company's objectives.

I hope that makes sense.