1.
POOR ALIGNMENT WITH
BUSINESS OBJECTIVES

2.
Incentive compensation
plans tend to be aligned
with business
objectives at the
strategic level, but the
devil is in the details.
Misalignment creeps in
when individual plan
components conflict
with broader goals.

3.
Look at the components of
your incentive compensation
plan individually.
Map them back to your
business objectives to make
sure they don’t inadvertently
conflict.
ATONEMENT

4.
EXCESSIVE PLAN COMPONENTS

5.
If your incentive
compensation plan
has six or seven
components, your
sales team won’t
know where to focus.
Worse, you could be
using your plan as a
quasi-manager to
compensate for weak
leadership.
1 2 3 4 5
6 7
PERFORMANCE

6.
Shoot for three measures in your incentive
compensation plan. Pushing that to 4 or 5 is
sometimes justified, but when you hit 6 and
7, employee performance drops dramatically.
ATONEMENT

7.
OVER-SHARING THE WEALTH

8.
How many checks do you cut on a single sales
deal? A few? A few dozen? One hundred and
sixty-one?
If you’re paying team members whose
contribution isn’t clear, then there’s a good
chance you’re overpaying, and that the link
between performance and payment is broken.
1 DEAL

9.
About 75% of companies pay five people on a
typical deal.
Stay up to date on who contributes, and
develop a pay structure accordingly. Let
incentives drive and influence specific actions.
ATONEMENT

10.
DEMOTIVATING MEASURES

11.
These discouraging practices summon the
wrath of the sales team and weaken the
connection between behavior and reward.
Capped
Commissions
Holds &
Releases
Payment
Timing

12.
Drop those infernal caps. They
prevent sales reps from
reaching their full potential.
Drop the holds. Don’t turn your
sales reps into collection
agents.
Pay on time. Paying months in
arrears is demotivating.
ATONEMENT

13.
ERODING PROFITABILITY

14.
Unexpected payouts to sales reps
can cut into your business’s profits.
Example: Accelerators. They’re a
great tool for motivating your team
to sell more, but you have to keep
your eye on the budget

15.
Avoid unpleasant surprises by modeling
not one, but several budget scenarios in
your plan-design phase. Try these three:
1. What do you expect your sales performance
to be?
2. What if a few high performers carry the
company and earn far more than planned?
3. What if a big percentage of reps outperform
the plan?
ATONEMENT

16.
INABILITY TO MEASURE SUCCESS

17.
It’s good when your gut tells
you that your organization is
doing great, isn’t it?
NOPE.
A solid incentive
compensation plan is built
around data, not intuition
or conjecture.

18.
Use benchmarks
derived from hard
data to measure
performance.
ATONEMENT
Use the approach that’s right for you:
benchmarking against an aggregate
group, against industry standards, or self-
benchmarking against company goals.

19.
LACK OF TRACEABILITY
TO SALES BEHAVIOR

20.
A solid foundation of data is
one of the “thou shalt
haves” of business.
If information you need is
swirling around a murky
pool of data, then your
compensation plans more
than likely are based on
intuition rather than
facts, and audits will be a
nightmare.

21.
Ensure that anyone who
earns incentive
compensation can trace
every payment back to
a particular behavior or
business event.
ATONEMENT

22.
INCENT RIGHT
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