Three documents. Three owners. Zero integration.
The incentive scheme was designed by HR. The rep targets came from Finance. The payment curve was copied from last year with minor adjustments.
Nobody asked whether they worked together.
The disconnection problem
In most organisations, sales compensation evolves in fragments.
HR owns the incentive scheme philosophy. “We pay for performance. Here’s the bonus structure.”
Finance owns the targets. “Based on last year plus 8%, here are the numbers.”
Sales operations owns the payment curve. “Here’s when bonuses kick in and what the multipliers look like.”
Each component makes sense in isolation. Together, they often create perverse incentives.
What the research shows
Studies on sales force compensation reveal something uncomfortable: integrated plans outperform fragmented ones by 17.9% in revenue generation.
The gap isn’t about having better components. It’s about having components that work together.
An aggressive target paired with a conservative payment curve demotivates. A generous payment curve paired with an easy target overpays. The interaction matters more than the individual pieces.
The integration questions nobody asks
When we work with clients on compensation design, we start with questions that cross functional boundaries.
Does the target methodology match the incentive philosophy? If you want reps to focus on growth, but targets reward holding ground, you’ve built in a contradiction.
Does the payment curve match the target difficulty? A steep curve works with achievable targets. It destroys motivation with stretch targets. The curve and the target have to be designed together.
Does the timing of payments match the selling cycle? Monthly bonuses for quarterly selling cycles create end-of-month gaming. Annual bonuses for transactional sales lose immediate motivation. Timing isn’t a detail -it’s design.
Does the scheme drive behaviours that serve customers? Easy to forget. Schemes optimise what they measure. If they measure volume without quality, quality disappears.
The three-document test
Pull your incentive scheme, your target-setting methodology, and your payment curve. Put them on a table. Ask:
- Were these designed together or separately?
- Can you trace each design choice to an intended behaviour?
- Do the intended behaviours of each component align?
- When the components interact, what behaviours do they produce that no single component intended?
Most organisations can’t answer question 4. That’s where the problems hide.
What integration looks like
Integrated compensation design starts with behaviours, not numbers.
What do we want reps to do? Visit specific customer segments. Focus on specific products. Build relationships rather than transactions. Develop new accounts rather than harvest existing ones.
Then we work backward. What payment structure rewards those behaviours? What target methodology is achievable but stretching? What timing creates urgency without gaming?
The numbers come last. The philosophy comes first.
The 17.9% opportunity
That research finding -17.9% revenue improvement from integrated compensation -represents real money.
For a 50-person field force with R500M in sales, that’s R89.5M. Not from working harder. From aligning the signals.
The disconnection between your three documents isn’t a process problem. It’s a strategy problem.
Finance, HR, and Sales Operations don’t need to work faster. They need to work together. On the same problem. At the same time.
That’s how you turn three documents into one system.
Written by
Dieter Herbst
CEO & Founder at Herbst Group. Working with pharmaceutical commercial leaders across South Africa, Kenya, and Brazil to transform sales force effectiveness through evidence-based approaches.
Connect on LinkedIn
