As we near the midpoint of the sales year – at least for December 31 companies – it starts to become apparent who the really big producers are, and just how much they might be earning this year. It’s a good time to re-examine your sales commission plan if you’re one of those companies that’s commits….....Deadly Sin #5 – Capping incentive compensation..
Why do companies set a limit on how much a sales rep can earn, or how much he/she can earn on a single deal? I suppose there are some CEOs, or boards of directors, who simply don’t believe a lowly peddler should be the highest-paid employee in the company. Or perhaps they have a nagging suspicion that big paydays have more to do with luck than with skill or hard work.
Regardless of the reason, capped comp plans are destructive for a number of reasons:
I can’t help but feel that some CEOs institute caps out of nothing more than jealousy or resentment.
Those CEOs don’t just need to fix their comp plans… they need compensation therapy.
What are your thoughts on this subject? Let us know.