Are you paying for the behaviour you actually want?
Last week we looked at scaling across regions and why some standards must be fixed everywhere. But in the mind of the employee, how people are paid, David and I firmly believe shapes how they behave more than any other.
Why does compensation beat every other lever?
Because it is the clearest message a business can send around what it values most.
We’ve seen leadership ask the sales team for new business in every all-hands meeting, and yet the compensation plan pays more for renewals.
The team then hits their renewals target and misses the new business one every single time. It’s not that the sales team wasn’t listening, but they are doing exactly what the system has asked them for.
If strategy and the compensation plan are at odds, the compensation plan will win.
Where do compensation plans go wrong?
We’ve narrowed it down to four places:
New business against renewals. The strategy says grow, but the easiest money sits within the existing base.
Revenue against margin. If every pound of revenue pays the same (which is rare), discounting becomes a quick win to making commission.
Individual against team. Partner deals, shared accounts, and handovers get avoided when they cost something from the payout. Time-to-close and amount paid.
Big deals against safe ones. Weak accelerators mean a deal twice the size isn’t worth much more to the rep. So they chase the easier deal more likely to close.
None of these is a people problem. They’re design choices…!
What does a good plan look like?
Test yours like this:
It’s simple. A rep should be able to work out their own commission quickly. If they can’t, it isn’t driving behaviour, it’s more about payroll.
It rewards what you need now. Weight the plan to the two or three outcomes that matter most to the business.
It rewards stretch. Accelerators are WIN-WIN’s above target. Make the biggest deals the most attractive ones to chase.
How do you pay a team to win together?
In complex selling, one name has to go on the deal, but usually there are many people involved in getting it done.
Pre-sales, customer success, product, finance, legal and partners/partner teams all shape the outcome. Pay only the AE and you’re asking everyone to help just out of goodwill and doing their job. But we want this to be proactive and scale, a culture where everyone is doing the right thing - so design collaboration into the plan.
Here are two ways you could do this:
Pay the Pod. Group teams into Pods (more on Pod selling in the next article) around a set of accounts or a territory, and link part of everyone’s variable pay to the Pod number. A colleague’s win becomes your win, so sharing what you know or can find out is in everyone’s interest.
At Teradata, this drove not only better collaboration within the Pods, but also a new competitive situation between Pods, each trying to be the most successful.
Pay the Assist. Reserve a set percentage of every deal’s credit for the people who helped win it. Significant contributors are named in the CRM when you Close-Win the deal. This should be a joint decision from the AE and Sales Manager and should be shared within any win stories for company-wide recognition, it can help drive the culture of intelligence sharing. What if nobody ‘assisted’, that share goes into the Pod pool, so there isn’t ever a reason to leave anyone out.
Paying for these behaviours will start the shift. Leaders who then share, ask for and celebrate the intelligence build the culture that means you take your complex selling to the next level.
So again, design collaboration into the compensation plan!
How does compensation link to the rest of the Commercial engine?
Directly. As part of the career path article. Ensure each level is worth reading, so pay you rise as people move up. With forecast integrity part of the promotion, this again will be a WIN-WIN.
Where approaches differ
A business focused on land and expand will weight renewals and upsell more heavily.
One entering a new market will prefer and value, new logos more.
Partner-led models need splits that make the co-selling worthwhile. The size of the Pod share and the assist percentage depend on how complex your deals are and how many people they need. Set them deliberately and review each year.
But remember the principle doesn’t change - decide the behaviour first, then design the compensation plan to pay for it.
The question worth asking
Look at your current compensation plan - Read it as a rep, line by line. If you followed it, what would you spend your week doing?
If the answer isn’t what your strategy needs, you’ve found your gap right there.
Next in Building the Commercial Engine: what is Pod selling, and why does it work?
Building the Commercial Engine is a series on the parts of a commercial organisation that make sales performance sustainable, scalable, and forecastable.
Kaizen-One is a commercial transformation consultancy for B2B SaaS and technology companies. We help leadership teams design compensation that pays for the behaviour their strategy needs. If your plan and your strategy are pulling in different directions, let’s talk. kaizen-one.co.uk
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