A sales compensation design effort yields results in three areas: revenue increase, margin improvement, cost of compensation in relation to sales productivity. Be sure you know why you are changing your plans and what you hope to accomplish, and your plan design will be much more likely to yield improved results.
The variable pay plan should take care of minor fluctuations in sales volumes. For larger shifts, the staffing level and/or coverage model will have to be addressed.
This is a common question, especially for smaller companies, whose resources are limited. It’s certainly understandable for a manager to want to develop an incentive plan that only pays out of the company profits (if there are any).
The practice of paying more than one person for the same sale is a common one, and one of the situations in which we most often find it is in Inside/Field sales teams. It is totally appropriate and makes sense to pay two people for a sale in either of the following situations…