What Jobs Should (and Shouldn’t) Be on a Sales Compensation Plan?

Determining what jobs should participate in a sales compensation program is a foundational design decision for go-to-market (GTM) organizations. Eligibility decisions reflect:

• An organization’s pay-for-performance philosophy;
• The behaviors it seeks to encourage; and,
• The performance management approach best suited to reinforce those behaviors.

Although eligibility decisions should begin with philosophy and behavioral intent, organizations also should consider the incentive cost and operational investment required to support a sales compensation program.

In many organizations, actual incentive payout exceeds the aggregated target incentive across eligible roles because plans often provide accelerated earnings for above-target performance. The operational investment also extends beyond payouts to the activities required to assess, design, communicate and administer the program. As eligibility broadens, both cost and administrative complexity typically increase.

However, these costs and investments shouldn’t determine eligibility on their own. When designed effectively, sales compensation is one of the most powerful mechanisms an organization can use to align behavior with business objectives, reinforce accountability and translate strategy into execution.

The key question then isn’t simply how many jobs should participate in a sales compensation plan, but instead, what particular jobs should be included based on the organization’s pay-for-performance philosophy, GTM strategy and sales contribution definition. This article presents a practical set of guidelines to help leaders make that decision.

Sales Compensation Eligibility Guidelines

Organizations should use a consistent set of principles to determine whether a job is eligible for a sales compensation plan. Eligibility should be determined at the job level. In other words, it shouldn’t be decided for specific individuals.

The job should meet all three of the following criteria:

1. There is a customer relationship and a significant level of contact. The job must be primarily customer-facing, with direct customer engagement as a core responsibility.
2. It involves directly persuading the customer to purchase a product or service. The job must play an active role in influencing customer purchasing decisions.
3. There are clear and quantifiable sales objectives. The job must be measured against specific, trackable goals tied to revenue or sales outcomes.

What does “persuasion” mean in this context? In sales compensation, persuasion refers to activities that actively influence a customer’s decision to buy or expand use of a product or service. It includes:

• Communicating the value proposition;
• Overcoming objections;
• Negotiating deal terms; and,
• Securing customer commitment.

The table below provides a simple decision matrix that organizations can use to determine whether a job should be eligible for sales compensation.

Options to Narrow or Widen Eligibility

The three core criteria provide a strong baseline for determining eligibility, but eligibility is a choice and not a rule. Organizations may choose to narrow or broaden eligibility based on their pay philosophy, GTM strategy and administrative preferences. Whatever additional criteria are used, they should be applied consistently and aligned with the organization’s overall sales compensation philosophy.

Organizations that want to apply a narrower definition of eligibility may use additional criteria such as:

• Defined percentage of time spent selling (e.g., 80% or more);
• Responsibility for a sales quota;
• Assigned to a sales territory;
• Ability to measure and track individual sales goals;
• Plan can’t include key sales objectives or management by objectives; and,
• Exempt status (doesn’t require overtime).

Organizations also may choose to broaden eligibility to include jobs that contribute meaningfully to customer acquisition, customer growth or revenue realization, such as those that:

• Generate leads from marketing activities or events (e.g., marketing roles);
• Advance opportunities to qualified status (e.g., lead-generation representatives);
• Influence customer adoption and usage (e.g., customer success);
• Manage solution launch or implementation to drive time to revenue (e.g., launch managers);
• Manage product placement or promotion via channel partners (e.g., market development managers);
• Optimize inventory or revenue performance (e.g., campaign optimization roles);
• Drive sales through one-to-many campaigns (e.g., self-service online manager);
• Influence partners to source, resell or support deals (e.g., partner or alliance managers); or,
• Co-develop and execute sales strategy with sales leadership (e.g., sales strategy leader).

Eligibility Use Cases

The following examples may help illustrate when a job would and wouldn’t be eligible for a sales compensation plan:

• Sales development representatives. A technology company uses sales development representatives (SDRs) to qualify inbound leads generated through marketing and hand them to sellers for closure. Although SDRs don’t negotiate contracts or close deals, they engage prospective buyers, communicate the organization’s value proposition and move opportunities from marketing qualified lead (MQL) to sales qualified lead (SQL) status. Because the role is customer-facing, helps influence buyer progression and is measured on a quantifiable sales outcome, it likely should be eligible for sales compensation.
• Estimators. A building supply manufacturer uses estimators to support request-for-proposal (RFP) responses by providing technical specifications and design input for prospective projects. The job focuses on estimate accuracy and turnaround time. Although estimators may interact with customer stakeholders, they support the sales process rather than serve as the primary job responsible for persuading the customer to buy. Placing the role on a sales compensation plan also could create incentives that favor deal closure over objective, accurate estimating. For those reasons, it likely shouldn’t be eligible for a sales compensation plan.

Applying Eligibility Consistently

Determining eligibility isn’t a one-time design decision; it’s an ongoing governance process. Sales compensation design teams should obtain leadership alignment on clear eligibility guidelines and apply them consistently to existing jobs and newly created jobs throughout the year. Doing so can promote equitable treatment, support legal defensibility and help ensure the right jobs are placed on the right incentive plan type to drive the right outcomes at the right cost.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Finance and Budgeting
• Sales Compensation