Best practices for commission structures

Table of Contents
    Add a header to begin generating the table of contents

    If a five-year-old can understand the commission structure, then that’s a great start. On the other hand, if you need a math’s degree to understand it, it’s probably not that effective.

    A very common complaint I receive from candidates is that the commission structure is hard to understand or it’s hard to obtain – i.e. When the hiring manager says, “we’ll only release it when we put forward an offer to you.”

    This is a big mistake because it puts up one extra barrier that isn’t necessary during the hiring process.

    In this market, it’s hard enough as it is finding top performers, so my advice is to make the commission structure accessible and easy to understand, with real-life examples of the top earners in the team and what they were paid recently.

    As a general rule, a new business acquisition role should have a 50/50 split between base and comms, and that’s all well and good, but it’s also important to give candidates a roadmap on how they can get to that magic OTE.

    Here are six points I believe make a strong commission structure;

    1. Paid monthly or quarterly (monthly especially for high volume/velocity sales)
    2. Uncapped
    3. An accelerator in place (big jump in the % paid) for achieving a set number well above target
    4. 4. A reasonable threshold with a tapered % up to the strong accelerator
    5. A clear and easy to understand policy on claw-backs
    6. Not dependent on others’ performance

    I find that discretionary plans often have the effect of de-motivating strong performers because (as per the definition) it’s up to an individual and is subjective. Therefore, it rarely ends well.

    In some cases, team commission structures can be a good idea but generally causes resentment when a top performer carries others within the team.

     

    SEEKING INDUSTRY-LEADING TALENT?

    Leverage Pulse Recruitment’s expertise in IT, sales, and marketing to secure elite professionals in Sydney, Melbourne, Brisbane, the wider Asia-Pacific and United States regions. Experience the advantage by connecting with us!

    FROM OUR PULSE NEWS, EMPLOYER AND JOB SEEKER HUBS

    Featured Articles

    How to Sell Yourself in Sales Interviews

    In the competitive world of sales, landing the right role requires more than just submitting a polished resume. A sales interview is your chance to demonstrate your ability to sell yourself—a skill that hiring managers expect from any top candidate. Just like closing a deal, succeeding in a sales interview involves understanding your audience, presenting…

    How to Build a Diverse Sales Team

    In today’s global market, diversity in sales teams is no longer just a buzzword—it’s a strategic advantage. A diverse sales team brings together professionals from different backgrounds, experiences, and perspectives, helping companies better understand and serve a wide range of customers. Studies have shown that businesses with diverse teams perform better financially, make more informed…

    Why Hiring Top Sales Talent Is Crucial

    Sales professionals are the backbone of any revenue-driven organization. They are responsible for generating new business, nurturing client relationships, and closing deals that contribute to long-term success. However, not all salespeople are created equal. Hiring top sales talent can mean the difference between meeting revenue targets and struggling to keep up with competitors. In today’s…

    Do You Know The Hidden Sales Killer?

    Imagine walking into a store where an eager employee follows you through every aisle, offering non-stop assistance and bombarding you with product details. It’s not helpful—it’s overwhelming. The same principle applies to B2B sales. While good intentions matter, excessive hand-holding can frustrate prospects, stall deals, and even push buyers away. To truly empower prospects, sales…

    The Best Sales Hiring Strategies for 2025

    Hiring top sales talent is crucial for the growth and success of any organization, especially in a rapidly evolving business landscape. As we enter 2025, the sales recruitment landscape continues to change, with technological advancements, evolving buyer behavior, and shifting workplace dynamics influencing hiring practices. In this blog, we’ll discuss the best sales hiring strategies…

    How to Negotiate a Sales Salary

    Sales roles often come with significant earning potential, but only if you negotiate your salary effectively. Many sales professionals hesitate to negotiate, fearing they’ll seem greedy or risk losing the job offer. However, strong negotiation skills are essential—just as you negotiate with clients in sales, you should also advocate for yourself. Whether you’re applying for…

    Common Mistakes in Sales Applications

    The sales industry is competitive, and a well-crafted job application can mean the difference between landing an interview and getting overlooked. However, many sales candidates make avoidable mistakes that hurt their chances of getting hired. Recruiters and hiring managers often receive hundreds of applications for a single sales role. If your resume, cover letter, or…

    What’s Next After a Sales Job Offer?

    Congratulations! Receiving a sales job offer is an exciting milestone, but before you accept and start your new role, there are important steps to take. From evaluating the offer and negotiating your compensation to completing pre-employment tasks and preparing for your first day, what you do next can impact your long-term success in the role….

    How to Straight Answers from Prospects

    At first glance, the name might seem counterintuitive, but the concept is simple: get your prospect to explain why they need your solution—or get to a quick “no” to avoid wasting time on unqualified leads. What is Negative Reverse Selling? Negative reverse selling leverages reverse psychology to move a prospect toward a clear decision. Instead of overcoming objections,…

    What Is a Commission-Only Sales Role?

    A commission-only sales role is a job where a salesperson’s income depends entirely on the sales they make—there’s no base salary. Instead, earnings are tied directly to performance, meaning the more deals closed, the higher the paycheck. Commission-only roles are common in industries like real estate, insurance, SaaS, and B2B sales, where high-ticket products and…