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Is it better to create sales compensation based on individual or company performance (or both)?

Bryan Frey's Profile


Lisa McCormack
Title: VP, Client Services
(VP, Client Services, ) |

Determining sales compensation peformance measurement is challenging for most organizations. It is important to include both individual performance and broader company goals. The following article has some good tips for developing a sales compensation plan and addresses this challenge

Alexander Haislip
Title: Author
Company: Independent
(Author, Independent) |

I've worked with several startups as they think about this exact issue and there's no easy answer.

I like to suggest that CEOs take on a blended approach. In baseball, a great hitter wants to go to the World Series. There's nothing better fro their compensation to be hitting home runs in the bottom of the ninth of game seven. Great players work to raise the level of the entire team in ways that go way beyond just hitting and fielding.

Good salespeople want to be compensated for doing well and great salespeople realize that their success is just as dependent on what they do as what their team members do.

You want to give people an incentive to help their teammates, but you also want to keep your all-stars around by basing some component of their pay on their performance. If you don't pay your best players for their skills, you'll soon find them as free-agents.

Consider a blended approach for compensation that includes both team goals and bonuses based on individual performance.

Finding the right balance between those two extremes is a matter of personal taste and will ultimately dictate what type of people you attract to your company. Incentives dictate behavior and you want to be sure you set up your salesperson compensation packages to reflect your company's culture.

You want the team to do well and each member of the team to contribute to the success of their peers.


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