Hey Noni! I'm not a fan of Caps on commissions. Limiting upside is not the best motivator. I think you have to approach the unintended consequences of out of market commissions (which is one reason to cap) and the perceived permanence by reps of comp plans. Commissions are an incentive program. At some point, many plans fall out of alignment with the original activity or goal it was designed to incentivize (which is why they are sometimes capped, to limit the cost risk to the company once that alignment is out of whack). I prefer to handle it by re-scoping the incentives, not by putting a ceiling on upside.
Hey Noni! I'm not a fan of Caps on commissions. Limiting upside is not the best motivator. I think you have to approach the unintended consequences of out of market commissions (which is one reason to cap) and the perceived permanence by reps of comp plans. Commissions are an incentive program. At some point, many plans fall out of alignment with the original activity or goal it was designed to incentivize (which is why they are sometimes capped, to limit the cost risk to the company once that alignment is out of whack). I prefer to handle it by re-scoping the incentives, not by putting a ceiling on upside.
Joe, great read, thank you for sharing. How do you feel about caps on commissions for sales teams?