5 Signs Your Commission Plan Is Failing (2026 Guide)
The Finance Leader's Radar:
When a commission plan works, it's silent. The revenue comes in, the checks go out. When it's broken, it's the loudest thing in the company. Here is how to spot the cracks before the dam breaks.
Sales commission plans are the most direct financial message you send to your sales team. When they're clear and aligned, they create a culture of high performance.
But commission plans age poorly. A plan that worked perfectly for a $5M ARR startup will break a $20M ARR scale-up.
As we head into 2026, here are the five red flags that indicate your current plan has become a liability—and how you, as a manager, can fix it.
1. Your Top Performers Are Leaving
This is the most expensive sign. Your best salespeople know their worth. If your plan is confusing, pays out slowly, or caps their potential, they will leave for a competitor who has it figured out.
The Fix: Benchmark your OTE and your Accelerators. Top performers leave when they feel the "upside" is capped. Remove the caps.
2. Sales and Finance Are Constantly in Conflict
Are your team meetings spent arguing about calculations instead of strategy? When your finance analyst spends more time defending her math than analyzing performance, your process is broken.
The Fix: This is a transparency problem. Stop trying to "fix the spreadsheet" and fix the workflow. You need a single source of truth that both sides can see and trust.
3. Reps Are "Gaming" the System
Are you seeing reps push low-margin products just to hit a kicker? Or sandbagging deals to dump them all in the next quarter?
"When your commission plan rewards the wrong behaviors, you'll get plenty of those behaviors."
The Fix: Align the metrics. If the goal is Profitability, stop paying on Revenue. If the goal is Retention, stop paying 100% upfront.
4. Calculations Take Weeks, Not Days
Does your sales team close the books on Day 1, but your finance team can't finalize commission payments until Day 15? That delay is toxic. It forces reps to fly blind.
The Fix: Automate. Manual data gathering is the bottleneck. A system should calculate payouts in real-time as deals close.
5. Your Reps Can't Explain How They're Paid
This is the simplest test. Ask a mid-performing rep to explain their commission plan. If they can't, your plan has failed. If they don't understand it, they aren't motivated by it.
The Fix: Simplify. If a rep can't calculate their check on a napkin, the plan is too complex.
Frequently Asked Questions (FAQ)
How often should we review our commission plan?
You should do a "Health Check" quarterly to look for gaming or misalignment, but you should only make structural changes annually. Changing the rules mid-year destroys trust.
What is a healthy "Cost of Sales" ratio?
For B2B SaaS, fully loaded sales compensation (Base + Variable) should be roughly 20-25% of First Year ARR. If your cost of sales creeps above 30%, your plan is likely too rich or your quotas are too low.
Should we conduct exit interviews about comp?
Yes. Sales reps rarely leave solely for money, but money is often the "final straw." Ask specifically: "Did you understand the comp plan?" and "Did you feel the targets were attainable?" The answers will guide your next plan design.
Related Reading
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