You’ve seen the symptoms. Revenue keeps climbing, but EBITDA doesn’t follow as expected. Sales costs inch upward, but you can’t explain the productivity gap. Too few reps are hitting their number. There are more questions than answers.
The root cause often hides in plain sight. Sales compensation plans are typically the root cause when they are built to “fix” underperformers or “reward” top reps, rather than drive company growth. The underpinning problem is typically quotas assigned by gut or history instead of applying insights from data. Comp plans fall short when created in isolation and disconnected from the strategy or actual buyer behavior.
If you’re managing multiple portcos and only a few are hitting targets, it’s worth asking: Is your compensation plan quietly killing your growth?
You’re not alone. Across the portfolio, you may be seeing:
- Sales reps chasing deals that don’t align with the strategy.
- Wild swings in attainment… boom one quarter, bust the next.
- High performers carrying the number while others flounder.
The wrong compensation plan will strain your numbers, erode morale, distort forecasts, and burn cash. And because these plans are often seen as sacred or too complex to fix mid-stream, they remain untouched. This quietly drains your revenue engine.
Here’s the truth: world-class compensation and quota design pays for itself fast. Top companies see 15–20% lifts in rep productivity within just two quarters. They also cut 4–6 points off the cost of sales. Forecast accuracy tightens. Disputes drop. Confidence returns.
This article breaks down the hidden revenue drag caused by misaligned compensation and quota. Don’t let inertia keep you stuck. There’s a smarter way forward, and you’re closer to it than you think.
What Misalignment Actually Looks Like
The early indicators of a failing plan are easy to dismiss. They feel like people problems. But they’re almost always structural.
If your reps are chasing small deals, selling the wrong SKUs, or prioritizing easy closes over strategic accounts, it’s not because they’re lazy or incapable. They’re responding exactly as the plan tells them to behave.
Compensation shapes behavior. When it’s disconnected from business goals, reps shift effort toward what gets them paid, not what builds enterprise value.
Look for these signals:
- Pipeline quality drops. Reps prioritize faster closes, not larger or strategic deals. This leads to revenue that’s harder to renew and expand.
- Forecast volatility rises. When quotas are misaligned, so is confidence in the forecast number. You’ll see massive variance quarter to quarter, with limited predictability.
- Rep performance skews. A few top reps hit excellence. Most hover below threshold. This signals poor quota distribution, ineffective territory design, or misaligned plan mechanics.
- Incentive spend is wasted. You’re paying out incentives without corresponding business outcomes, rewarding revenue that doesn’t improve margin or retention.
- C-level frustration builds. CEO and CRO conversations become reactive. Targets feel arbitrary.
If more than half your reps aren’t attaining quota, or your cost of sale has crept upward over the last few quarters without output gains, you’re not looking at a talent issue. You’re looking at a gap in design.
Why Quotas and Compensation Fail
Most companies build compensation plans reactively. Quotas are based on last year’s results plus a growth target. Compensation is built in spreadsheets, with logic that feels intuitive but often misses key tradeoffs.
The result? Plans that feel familiar but fail to motivate the right behaviors.
Common failure points include:
- Historical quota setting. Assigning quotas based on past performance, not market opportunity, penalizes growth territories and protects underperformers.
- Inflexible plan mechanics. Caps, cliffs, or unclear thresholds confuse reps and limit upside. When sales reps can’t model their own earnings, motivation drops.
- Overweighted product pushes. Compensation tied to internal goals (new product, service adoption) without tying back to customer value often results in missed revenue and low adoption.
- Misaligned pay mix. Aggressive variable pay structures in long-cycle, team-sell environments don’t make sense. Neither does a heavy base in transactional sales.
The biggest issue? These flaws compound. Poorly set quotas demoralize reps. Misaligned incentives distort behavior. And when plans feel unfair or opaque, even good reps disengage.
The True Cost of Misalignment
When you’ve lived in the numbers long enough, you know: small gaps compound into big problems.
We see it in the field every day. In one portfolio company, misaligned quotas led to just 30% of reps hitting the goal. Incentive costs were up, but so were missed bookings. After a redesign that rebalanced quota potential by territory and adjusted pay mix to match the role, quota attainment rose to 60% within two quarters. Voluntary attrition dropped by 6 points. Forecast accuracy tightened by over 3%.
These results are repeatable when the plan matches the strategy, the quotas match the market, and the systems reinforce both.
Done right, compensation work drives ROI in four key ways:
What “Right” Looks Like
Fixing compensation isn’t about complexity. It’s about clarity and alignment.
Best-in-class plans are simple, fair, and aligned to both the go-to-market model and company stage. They prioritize a few key metrics, ensure line of sight to impact, and reward the outcomes that drive enterprise value.
Here’s what great looks like:
- Quota setting reflects market potential: Not just based on last year’s bookings. Territories are balanced. Quotas are stress-tested.
- Pay mechanics match role dynamics: The plan fits the cycle, buying motion, and influence model. It rewards what matters, not just what’s easiest to count.
- Top reps earn more: Pay for performance is real. The top 10% of reps earn 2–3x more than average performers. And they know why.
- Plans evolve as the company grows: Early-stage plans reward logo acquisition. Growth-stage plans push retention, expansion, and margin.
Where to Start
If you’re seeing the drag but don’t have the time or capacity to address it head-on, start with a rapid diagnostic. You don’t need a 6-month overhaul. Resolution can be quicker than you think. First understand where the friction is, and whether it’s costing you more than you think.
Start with these questions:
- How many reps are currently on pace to hit quota?
- How are your top performers making their number?
- Are your compensation dollars tied to strategic priorities or just bookings?
- Can reps explain how they get paid accurately?
- Does the plan drive behavior that improves EBITDA?
If the answers aren’t clear or aren’t moving in the right direction, it’s time to act.
Closing Thought
You’re measured on growth. On clean forecasts. On driving value across the portfolio without adding unnecessary complexity. Compensation and quota are levers that, when pulled correctly, drive all of the above.
This is about removing drag that’s already costing you. The hidden inefficiencies in compensation and quota design represent both a risk and an opportunity. When incentive plans don’t reflect your strategic priorities or worse, when they reward the wrong behaviors, you’re forced to work harder just to stay in place. Misalignment creates noise, erodes trust, and slows momentum.
But when compensation and quota are built to reinforce your revenue plan, you see immediate gains:
- Stronger rep performance
- Improved morale
- Cleaner forecasts
- Real EBITDA impact
If you observe symptoms such as uneven attainment, rising cost of sale, or inconsistent pipeline quality, now is the time to act. The ROI on getting this right is fast, measurable, and well within reach. Don’t wait until misalignment becomes a crisis. Take the first step now to diagnose the drag and unlock the performance that’s been hiding in plain sight.
If you want to go deeper, schedule time with Cortado to talk through your challenges. We’re happy to engage in a conversation and answer questions about what you should expect. You’ll gain a lot of insights and then can make the decision on if it makes sense to engage the Cortado team in an engagement.
