Sin #1: Ambiguous Definitions
"Closed deal" means different things to different people. To sales, it's when the contract is signed. To finance, it's when cash hits the account. To legal, it's when all conditions are met. Your plan says "closed deal" without defining which one—and now you have three interpretations fighting for the same commission dollar.
The fix: Define every term that touches money. Booking date. Revenue recognition date. Commission eligibility date. If it's not written down, it doesn't exist.
Sin #2: Undefined Crediting Rules
Who gets credit when two reps touch the same deal? The plan says "sales credit goes to the responsible rep." But what does "responsible" mean? First touch? Last touch? Biggest influence? Most senior?
I've seen deals with 47 people claiming credit. That's not a comp plan—that's a lottery.
Sin #3: Missing Edge Cases
Your plan covers the happy path beautifully. Rep closes deal, rep gets paid. But what about:
- Deals that close after a rep leaves?
- Customers who cancel within 30 days?
- Renewals where the original rep is now a manager?
- Split territories mid-quarter?
Every edge case you don't define becomes a dispute.
Sin #4: Accelerators Without Guardrails
Uncapped accelerators sound great until a rep closes a whale deal and makes more than the CEO. Suddenly "unlimited earning potential" becomes "board-level crisis."
Always model your accelerators against realistic (and unrealistic) scenarios before you publish them.
Sin #5: Retroactive Changes
"We're adjusting quotas effective three months ago." This sentence has launched more lawsuits than any other in compensation history.
Changes should be prospective. Period. If you need to adjust, do it going forward with clear communication and rationale.
Sin #6: Invisible Calculations
If a rep can't independently verify their own paycheck, you've failed. "Trust us" isn't a calculation methodology—it's a recipe for distrust.
Every element that affects payout should be visible, traceable, and explainable.
Sin #7: No Exception Framework
You will have exceptions. The question is whether they're governed or chaotic.
Create categories. Define approval paths. Document rationale. Track precedent. Otherwise, your exception queue becomes your actual comp plan.
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