Designing a comp plan that holds
A comp plan is a description of the behaviour you will get. Rate tiers reward volume, chargeback windows shift risk onto the rep, and draws let people survive ramp while creating a debt that ends relationships badly. Most disputes come from terms that were never explained rather than from the headline rate.
Every element buys a behaviour
Volume tiers buy volume, including the shallow kind. Long chargeback windows push risk onto reps and reduce overselling, at the cost of pay that never feels settled. There is no neutral element.
Draws are a relationship decision
A recoverable draw makes ramp survivable and creates a debt for anyone who does not make it. That debt is the single most common cause of departures that turn into disputes, and it is entirely predictable at design time.
Explain it or pay for it later
Most comp disputes are comprehension failures. A rep who understood the chargeback window before the first chargeback is annoyed; one who did not feels cheated, and tells other reps so.
Common questions
- What is the most common comp plan mistake?
- Not explaining chargeback and draw terms clearly at signing. Most disputes are comprehension failures rather than disagreements.
- Should I use tiered commission?
- It rewards volume, including shallow volume. Worth pairing with something that measures quality if you use it.
- Are draws a good idea?
- They make ramp survivable and create a debt for people who wash out. Decide in advance how you will handle that, because it is entirely predictable.
More on building a team
The manager side: recruiting, onboarding, retention and the cost of losing a rep. Where the paid tier eventually lives.