A crucial part of financial planning is establishing revenue targets and a sales bonus plan for the coming year. To attract good salespeople, you need a clear and understandable bonus and compensation plan. Companies tend to make a number of mistakes in designing sales compensation plans, including:
• Too complicated
• Targets that are not revenue-related
• The ratio of Bonus to Base salary is too high
• Unpredictable payouts
• Too many carve-outs
• Creating incentives for time-shifting deal closes
