Whilst it may seem logical to have a regional/market approach to target setting in order to take account of local nuance, there is greater value in rolling the local knowledge into the overall methodology to ensure fairness.
Just because the targeting methodology is centralised this does not mean that everyone has to have the same target – only that there is the same approach to the target setting.
To enable a principle-based approach to target setting it is optimal to centralise the methodology and sales operations.
CENTRALISING SALES OPERATIONS
All messaging can be from top-down to show sponsorship and promote buy-in
The company has the ability to have a remuneration committee as a subset of the Company’s Remco
Rules of engagement are able to be issued with clarity and there can be aligned and commercial decision-making about any target adjustments
• Consistent and accurate calculations
• Administrative burden is not felt locally
• Timely project management of target issuance
• Ability to have an exceptions committee
RULES AND MANAGEMENT
You can ensure a fair approach to market conditions so that allowances for opportunity are weighted appropriately.
Centralising gives you the ability to have an exceptions committee
If you have a larger team, you ensure that those with the same role, opportunity and tenure
(and the same market conditions) have the same target any you can ensure a fair approach to different market conditions.
And finally, you can ensure the rules are simple and easy to understand