When revenue growth stalls, outdated compensation structures may be to blame. In this article, we unpack the design principles that keep reps focused and delivering. When growth slows, compensation plans are often overlooked, even though old incentives may now limit performance. This article is the third in a series on fixing compensation and quotas to accelerate growth.
In our first post, Diagnosing the Revenue Drag, we revealed how many sales organizations operate under plans that quietly erode performance. These issues don’t always show up in dashboards. Instead, they surface as missed targets, low morale, and stalled momentum.
In Strategic Alignment, the second post, we examined how to realign incentives with strategy. Compensation design, we argued, should not begin with spreadsheets. It should begin with your deal thesis and the levers that create value.
Now, in this third article, we turn to the most critical phase: designing for performance. This is where even experienced leaders stumble. It is not just about motivation. It’s about focus. Too often, plans encourage activity that doesn’t translate into Go-to-Market success. The result is predictable: costs rise, results disappoint, and confidence falters.
You’ll also see how to avoid the patterns that unintentionally reward low-margin deals or non-strategic customers. If your current plan feels familiar but underwhelming, you’re not alone. And if you want your next plan to do more than check boxes, this is the shift that matters most.
This is the third step toward building a compensation plan that does what it promises, fueling performance.
Defining Performance Measures That Actually Drive the Right Actions
The most effective plans reward results that align with strategic goals. Unfortunately, many comp plans still reward volume without regard for quality. Others use too many metrics, which creates confusion and disengagement.
Performance measures should be few, focused, and fully within the rep’s control. Avoid incentivizing inputs like calls or meetings. Instead, focus on business outcomes that reflect real progress.
Well-designed performance metrics might include:
- Net new revenue from target accounts
- Contracted annual recurring revenue (ARR) weighted by deal quality
- Multi-year deal conversion or attach rates for strategic products
Each measure should support the type of customer, deal structure, and growth profile your investment thesis demands. Avoid relying on traditional sales KPIs if they fail to match your current market strategy.
Pay Mix: The Most Overlooked Lever in Growth Stage Sales
The pay mix communicates what matters most. A 50/50 base-to-variable split suggests performance is the primary focus. A 70/30 split places more weight on retention and stability. Neither is wrong by default, but both send a clear message about risk and reward.
If a company is in scale-up mode, a more aggressive variable mix can accelerate outcomes. But in complex sales environments with longer cycles, heavier base pay can keep sellers engaged during ramp periods.
Key questions to ask when setting pay mix include:
- How long does it take a new rep to close their first deal?
- How much influence does a rep have over pricing and solution design?
- Are you asking sellers to change behavior or adopt new motions?
Choosing the wrong mix can either inflate costs or dampen motivation. The right one reflects rep control and expected outcomes.
The difference the right plan can make is clear. Here’s how an outdated design compares to one aligned with growth goals:
Structuring Upside to Accelerate Top Rep Contribution
Top performers account for a disproportionate share of results. If your comp plan does not reward breakout performance, you risk losing those high-impact contributors. Worse, they may stay and disengage.
Upside should feel earned but achievable. Reps should know exactly what it takes to unlock accelerators, and they should be able to model their path to target.
Strong upside design includes:
- Clear thresholds that unlock higher payout rates after target
- Tiered accelerators based on revenue bands or margin contribution
- Modeling tools that show expected earnings under multiple performance scenarios
Many operating leaders worry about cost overruns. That concern is valid. But if your payout model ties upside to profitable growth, that upside is well earned.
Preventing Unintended Behavior from Well-Intentioned Design
It’s common for plan to accidentally drive counterproductive behavior. For example, a bookings-based plan may create pressure to discount. A logo-count incentive might prioritize easy wins instead of strategic ones.
The best comp plans are tested against worst-case scenarios. Design teams should ask, “What would happen if every rep tried to game this?”
You can pressure test your plan by reviewing:
- Whether reps are incentivized to sell lower-margin products
- Whether reps have a reason to avoid certain segments or territories
- Whether activity spikes align with deal value or simply calendar milestones
This analysis should be part of your annual planning process. Testing for behavioral risk is as important as modeling financial impact.
When to Use Commission-Heavy Models Versus Quota-Based Plans
Commission-heavy models offer simplicity and transparency. They are ideal for short-cycle, transactional sales environments. But they lack predictability and often encourage short-term focus.
Quota-based models are better suited to enterprise sales. They support longer cycles, team collaboration, and strategic selling motions. They also allow more alignment with territory potential and forecast accuracy.
When deciding between the two, consider:
- The average deal size and time to close
- The number of stakeholders involved in a typical deal
- Whether reps control pricing and discounting
In many cases, a hybrid model works best. A small commission component can reinforce hustle, while quotas tie earnings to strategic success.
Managing Cost Predictability While Preserving Motivation
Operating partners often face a familiar tension. Finance teams want cost predictability. Commercial leaders want motivation and flexibility. You can satisfy both, but it takes precision.
Start by defining a cost-of-sale target at plan level. Model what happens at 80, 100, and 120 percent attainment. Then validate whether your plan creates sustainable earnings at each level.
In parallel, evaluate rep-level cost of labor. Use benchmarks to keep base salaries competitive. Then use variable comp to differentiate high and low performance.
A few guiding principles:
- Reps who consistently underperform should earn close to their base
- Reps who hit target should earn market-aligned total compensation
- Top performers should earn well above market in years of strong growth
This model balances financial discipline with commercial ambition. It also gives boards and portfolio leaders the confidence to invest in go-to-market scale.
Aligning Plan Design with Target Behaviors and Strategic Outcomes
Ultimately, comp plans are not just about payment. They are tools for focus. Every element of the plan, from pay mix to upside, should reinforce the behaviors your strategy depends on.
If your plan is misaligned, even high-performing reps may work against strategic goals. And if reps cannot see how their actions translate into earnings, your plan will fall flat.
You can improve behavioral alignment by:
- Tying incentives to specific product lines or segments
- Creating stretch targets linked to cross-sell or multi-year deals
- Using clawbacks or deal quality measures to protect long-term value
The more clearly your plan connects actions to outcomes, the more effectively it will drive performance.
Keep Evolving: Performance Design Is Not One and Done
Designing for performance isn’t a one-time effort. As your portfolio company grows and the sales motion changes, your plan should evolve right alongside it.
Early-stage companies may rely on hustle and volume. Later-stage firms need structure, predictability, and margin focus. Your comp strategy should grow with the business.
Conduct a yearly review to be sure your plan matches today’s strategy, market realities, and team dynamics. Let data, feedback, and modeling guide any adjustments rather than intuition.
The strongest operators make comp design a core discipline, not an annual scramble.
What’s Next
As you work through your compensation planning, don’t hesitate to reach out to Cortado for a conversation. We’re happy to talk through your challenges and share our thoughts. If you need a hand, we can help your team build the ideal compensation strategy.
If you missed the first two posts, you can explore them here:
In Part 4, we will shift focus to quota setting. We will share how to move beyond gut-feel targets and create quota structures that are fair, defensible, and confidence-inspiring at both rep and board levels.
If you are beginning to wonder whether your current plan design is doing enough to support your growth goals, that is a conversation worth having. Reach out to discuss how we can help bring performance design into alignment with value creation.
