Incentive plans

Stop trying to engineer behaviour with compensation.

You'll only create complexity, demoralisation, and frustration - for everyone.

Leadership complaints about sales compensation plans are depressingly familiar:

• The sales team games the plan

• Sellers optimise for their payout, not the business

• I'm paying out heavily when the rep barely contributed

• My reps don't even understand how the plan works

And that's before you hear from the reps: it's too complicated, it keeps changing, payments are always delayed.

In nearly every case, the plan is at fault. And since the plan doesn't create itself - whoever designed it made the mistake!

There are two principles to keep front of mind:

1️⃣ Start with what the company actually needs. Then incentivise what truly matters.

2️⃣ Keep it simple. Easy to understand, easy to administer, and harder to game.

Simplicity

A well-designed incentive plan - and it's worth calling it that, rather than a compensation plan, to remind everyone of its purpose - has a single primary metric. First-year ARR. Total contract value. Gross margin. Pick one that drives business value.

From there, add a small number of specific accelerators: overachievement, perhaps long-term contracts where they genuinely benefit the business. Then stop. Resist the urge to add more.

Every additional variable is another thing to misunderstand, game, or argue about.

Clarity

Many leadership teams often forget that you have two levers for shaping behaviour. The incentive plan is one. Management is the other - and it's the one that gets chronically underused, but ensures you keep the incentive plan clear.

In every other function, you don't adjust compensation to drive behaviour. You set clear expectations and hold people to them. Sales is no different.

• Want the CRM kept up to date? Use its output visibly and consistently. Make it clear that hygiene is a professional expectation, not an optional extra. Invest in automation to remove unnecessary admin.

• Want your team spending time on outbound? Agree on time blocks, set weekly targets, and track them consistently.

Neither of these requires touching the incentive plan.

Multi-year deals

Should they attract additional compensation? This is a great example of thinking about what your business needs.

If short contracts churn because clients haven't had time to see value, incentivise multi-year deals. If investors place a premium on long-term contracts, incentivise them. But if your retention is already strong and multi-year contracts just mean discounting ARR for no real gain, don't.

The question isn't general, it is specific: "what does our business actually need?"

The most effective incentive plans are, frankly, boring. Simple, predictable, and difficult to game. The real work isn't in the plan - it's in the management: clear expectations, consistent accountability, and a team that understands what genuinely matters to the business.

At the same time, there are plenty of hidden pitfalls in incentive plan design - along with tried and tested ways to avoid them. I am happy to share some example structures or talk through what's not working in your current plan.