Often we are asked about how to provide incentive compensation for team results. The key principle here has to do with how the sales are made. Do the team members depend on each other to be successful? If they do, for each sale, then a team incentive where they have a single team target and a single team actual result, all receiving the same payout, makes great sense.
If each team member has his or her “own” sales, and also supports the effort of the team, then an individual sales goal and a team goal may both be indicated (usually with a higher weight on the individual goal).
And if team members are only linked by the fact that they all report to the same boss, then a teamed incentive component may be no more than a “shared lottery ticket,” and you would probably do well to apply those incentive dollars to something more directly linked to the skill, effort and productivity of the individuals.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.