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5 essential principles for an error-free compensation plan

Salespeople are the lifeblood of any company. They are integral to the growth of a company. Companies must go beyond the salary structure to keep this growth engine ticking. Offering them compensation packages comprising assured pay and bonuses is the right step. 

Creating a sales compensation plan that is both motivating and error-free is a critical task for any business. A well-designed compensation plan can incentivize your sales team to drive growth and revenue, while an error-prone plan can result in lost sales, frustrated employees, and legal issues. To help you create a successful compensation plan, we've compiled five essential principles to guide you in designing a fair and effective strategy.

5 essential principles for an error-free compensation plan: Streamline your compensation calculations and motivate your sales team to achieve greater success

Creating an effective sales compensation plan is crucial to motivate and incentivize your sales team, ultimately driving growth and revenue for your business. However, it's not always an easy task to design a compensation plan that is fair, motivating, and error-free. In this blog post, we'll discuss five essential principles to guide you in creating a sales compensation plan that works for your business and sales reps. Whether starting from scratch or looking to revamp your existing plan, these principles will help you achieve a successful and error-free compensation strategy.

  1. Transparency
  2. Automation
  3. Sales Enablement
  4. Equal opportunity
  5. Sales Management


Transparency is the best way to build trust and a culture of fairness. It enables you to avoid surprises, discrimination, and the loss of good people. Transparency means providing employees with information on compensation policies and practices. It also means being open about the policies and procedures to remove ambiguity. 
Companies can do it through:

An annual review process that explains why and how the management made decisions regarding raises or bonuses.

  • Offering clear information about performance ratings.
  • Deploying performance or sales management software to give professionals access to the latest compensation policies, formulas, and performance metrics.



Sales enablement is the process of helping salespeople do their job better. It includes training, coaching, and mentoring. It intends to ensure that every team member has access to high-quality information about how to sell.  This practice can help employees understand the product or service they sell and its impact. It ingrains in the staff the benefits of following the best practices while training them to understand the industry trends and competitor strategies.

Sales Enablement

Automation is a critical component of sales compensation. It helps with sales management and sales enablement. It also ensures that your pay-for-performance programs have the intended effect.

Despite technological advancements, some companies are yet to automate tedious manual processes. For instance, shadow accounting and manual commission calculations consume valuable time. Automation can free them from this burden while empowering employees with relevant reports, accurate payments, and sales enablement content.

Equal opportunity

Equal opportunity is a principle of fairness, but equal outcomes are not guaranteed. In the context of sales compensation practices, equal opportunity means all sales reps have an equal chance to succeed and earn rewards based on their performance.

It also means making sure your sales force gets compensated fairly. Suppose some groups of employees are disadvantaged by how performance targets are set (e.g., women or caregivers). In that case, they should receive extra training or other perks to make them more competitive.

Sales Management

Sales management is a critical component of sales compensation, but it's more than just setting goals and tracking metrics. It's a process that starts with the hiring interview and ends with developing your team members into leaders.

Sales management is about helping the sales team succeed by providing coaching and training. It means that if you have an employee who isn’t performing well, an effective manager will work with that employee to help them improve instead of just firing them.

By implementing these principles, you can ensure that your compensation plan maximizes performance and minimizes errors, freeing up your time to focus on driving your business forward.


Other tips to empower and reinforce your sales teams

Keep these 2 goals in mind when making decisions about sales compensation:

  •  Refrain from tying salespeople's pay to their performance. Companies should reward salespeople for the value they create, not just the number of deals closed.
  •  Make sure incentives get aligned with your goals and capabilities. 

Maximize performance by streamlining commission calculations with Blitz

If you plan to empower your sales teams with an automated sales commission platform, Blitz is the solution to provide your teams with the tools they need to work efficiently while generating more sales.

From automating mundane tasks to handling complex compensation calculations, Blitz can help your sales team reach its potential.


Contact us today >

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