Sales Compensation Plan Design Checklist

Run this with Finance, Legal, and Sales Ops before any comp plan is communicated to reps. Every unchecked box is a launch risk.

Pay Mix

1. ☐ Base/variable split matches role's deal-cycle length and influence over outcome (e.g. 50/50 for transactional AE, 70/30 for an overlay/SE role with less direct control)
2. ☐ On-Target Earnings (OTE) benchmarked against current market data for the role/region within the last 12 months
3. ☐ Variable pay is tied to metrics the rep can actually influence, not company-wide numbers outside their control
4. ☐ Pay mix is consistent across reps in the same role/level — no unexplained plan-to-plan inequity

Plan Mechanics

1. ☐ Primary quota metric is singular and clear — one number reps chase, not three competing priorities
2. ☐ Secondary metrics, if any, are capped at no more than 20% of total variable so they don't dilute focus
3. ☐ Commission rate(s) stated in writing, in dollars-and-cents terms a rep can calculate by hand
4. ☐ Draw, if used, has a clearly stated recovery mechanism and end date
5. ☐ Plan document defines "sale" precisely — booked vs. signed vs. invoiced vs. collected — this is the #1 source of disputes

Accelerators & Decelerators

1. ☐ Accelerator thresholds and multipliers are modeled against last year's actual attainment distribution, not a hoped-for distribution
2. ☐ Decelerator (sub-threshold) rate is defined explicitly — reps below plan should never be a payout blind spot
3. ☐ Modeled cost of accelerators at 100%, 120%, and 150% attainment has been run and approved by Finance (see Accelerator & Decelerator Curve Calculator)
4. ☐ Kicker/SPIFF stacking rules are defined so accelerators and SPIFFs don't compound in unintended ways

Caps & Guardrails

1. ☐ Explicit decision made on whether commission is capped or uncapped, with the cost implication modeled either way
2. ☐ Anti-gaming guardrails exist for known abuse patterns — deal-splitting, quarter-end sandbagging into the next period, discounting purely to hit a number
3. ☐ Clawback/chargeback language is included and reviewed by Legal (see Commission Clawback Clause Language Library)

Payout Operations

1. ☐ Payout cadence and timing is stated (e.g. "commission paid on the 15th of the month following invoice, not booking")
2. ☐ Commission statement format is defined and will be delivered to reps before the first payout — not built reactively after the first dispute
3. ☐ Dispute/appeals process has a named owner, a deadline to file, and a defined resolution SLA

Compliance & Communication

1. ☐ Plan has been reviewed against applicable wage law (e.g. commission-on-termination rules, state-specific "earned wage" definitions) before rollout

Sign-Off Block