Using empirical data from 35,000 compensation plans, Xactly Corporation has identified these best practices your company should follow when designing a sales comp plan.

2. POOR ALIGNMENT WITH
BUSINESS OBJECTIVES

3. 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.

4. 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.
ATONEMEN
T

5. EXCESSIVE PLAN
COMPONENTS

6. 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

7. ATONEMEN
T
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.

8. OVER-SHARING THE WEALTH

9. How many checks do you cut on a single sales
deal? A few? A few dozen? One hundred and
sixty-one?
1 DEAL
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.

10. ATONEMEN
T
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.

11. DEMOTIVATING MEASURES

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

13. 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.
ATONEMEN
T

14. ERODING PROFITABILY

15. 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

16. ATONEMEN
T
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?

17. INABILITY TO MEASURE
SUCCESS

18. 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.

19. Use benchmarks
derived from hard
data to measure
performance.
Use the approach that’s right for you:
benchmarking against an aggregate group,
against industry standards, or self-benchmarking
against company goals.
ATONEMEN
T

20. LACK OF TRACEABILITY
TO SALES BEHAVIOR

21. 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.

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

23. Real Time Attainment Metrics Pay Closer to Sales Event
Motivate Team Trust the System

24. I N S P I R E PERFORMANCE