Comp Plans Aren't Your Problem!

But we think they are the solution to our problems....

I’ve never dreamed of writing about commissions or comp plans. Everyone has their own views about them, and no single answer is right. I have close friends who argue fiercely against commissions, and they lead some of the highest-performing organizations in the world. I’ve also worked with organizations with very strong comp and commission plans, and many are outstanding performers.

And yet here I am writing about comp. Why?

Increasingly, I’m seeing more organizations not achieving their goals. One of the first issues people focus on is comp and commission. It seems to be the universal solution to performance. I can’t tell you how many conversations with Rev Ops executives where the attitude is “with the right comp/commission plan, we will hit our goals.”

But I don’t know that commissions are inherently the reason we don’t achieve our performance goals.

I think comp is the ultimate corporate excuse. It is the “easy button” we reach for whenever the sales performance of a company feels off.

When we can’t recruit and retain the right people, we blame the comp plan. When we miss the numbers, we tweak the comp plan, perhaps a quick SPIFF. When someone leaves us for another job, the exit interview almost always points to the comp plan.

Compensation has become the driving factor in doing things a certain way and it is the scapegoat when things go wrong.

The question that interests me isn’t whether the model is broken. It’s why we keep treating it as the universal solution to any problem we have. What are we really avoiding?

What I think is happening is that we are relying on a set of financial incentives to do the work of leadership.

Set the number, attach the money, and let people do the math. We treated comp as a mechanical substitute for engaging, coaching, and developing our people. The plan sets the direction and strategy. It motivates the seller, sets their priorities, it drives their focus in desperately closing deals in the final week of the quarter.

Somewhere in this process, managers stopped managing. The goal became “hit your number,” not “grow the person.” And when performance inevitably broke, the fix was always the same: change the plan. Every year, leadership teams spend weeks designing complex formulas to automate the behaviors they want.

The plan became the work. But the real performance issues were, too often, ignored.

We can see the result now. Roughly 75% of sellers aren’t making their goals, turnover is climbing, and engagement has cratered. It’s tempting to call this the plan breaking down. It isn’t. If the comp plan had ever truly driven behavior, redesigning it year after year would have fixed this by now. It hasn’t. The numbers don’t show a plan that stopped working. They show a plan that was never doing the work to begin with. Commissions never managed anyone. They never developed a human being. They never coached a complex deal or built a missing skill.

This is exactly why some of the best leaders have walked away from commissions altogether. It would be easy to misread this and adopt it as a new tactic: the best leaders dropped commissions, so we should too.

This misses the point entirely. They didn’t win by removing a commission structure; they won by building real management and leadership. They stayed close to their people, maintained clarity about what mattered, developed talent, and aligned teams to do the actual work. As people did the right work and achieved their goals, the commissions became irrelevant.

My friend, Mitch Little, ran the sales organization at Microchip for decades. He moved away from commission-based compensation years ago, aligning his teams instead around customer-facing problem-solving. Collaboration and teamwork became the foundation of how they engaged customers and worked internally. New hires were selected based on cultural alignment, not coin-operated tendencies (figuratively and literally). Comp was important, but it was based on the collaborative success of teams working together. The result? Microchip maintained less than 3% voluntary attrition and became one of the highest-performing organizations in its sector.

Their comp approach was a result of how they led, not the cause of it.

So if commissions aren’t the lever, what should leaders actually do to drive the highest levels of execution?

If I gave you a list, a clear structure, or a set of best practices for a new comp plan, I’d fall into the exact same trap. I’d be validating the idea that “comp is the problem.”

The answer to maximizing performance is simply doing the work. It’s about seeing the work, judging it, developing our people, and holding them accountable in real, sometimes uncomfortable conversations. It’s about leaders being good enough at the work themselves to actually coach it.

I’ve written before that watching the work is not doing the work. The comp focus is just another version of the same problem. It’s a substitute we reach for so we don’t have to do the slower, harder, messy work of leading people.

The fact that we can’t stop talking about compensation is the ultimate symptom. The importance of the comp discussion pulls everyone in, even me. It’s the conversation we are allowed to have in the boardroom instead of the one we should be having.

We aren’t confused about compensation. We’re hiding behind it.

Afterword: Once again, I love the perspective from this AI narrated discussion of this article. They always have a way of presenting the materials. Enjoy!