Sales Intelligentsia

Should you create sales comp plans that cap upside earning potential?

No.

If you have a star performer who brings in a huge proportion of your company’s revenue why shouldn’t he or she be the highest paid employee in the company?

There is no logical answer refuting this point yet company after company fiddles with comp plans because X Rep is making ‘too much’.

The primary challenge of sales compensation planning is not limiting costs, it is balancing reasonable average costs with enough upside potential to motivate your people to high performance.

Your people need to see the path to success laid out in a way that makes logical sense and is realistic, if difficult, to achieve. Plans that offer huge payouts that are impossible to achieve are useless and to an experienced rep they are a red flag that the company doesn’t know what they are doing- or really doesn’t value their abilities.

Don’t cap success. Build a path of achievement that is possible but not easy. Comp your CEO on the same plan (more about that later). Consider building an incentive-based company in which everyone has performance-based targets (more on that later too).

Money is motivation. For some it is everything, for others recognition, toys, games, titles and entitlements (remember the key to the executive washroom?) are the carrot. They’re all ingredients in a successful comp plan.