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The One Question I Ask Every Time I Design a Comp Plan
Most compensation plans don’t fail because they’re complicated—they fail because they’re unclear.
If you can’t name the exact behavior your comp plan is designed to drive, you’re not incentivizing performance—you’re creating confusion and misalignment.
In this episode, I break down the one question that cuts through all of it—and why getting this right changes how your team actually shows up day to day.
If you want a comp plan that drives the behaviors you actually need (not just outcomes you hope for), this episode will show you where to start.
What You'll Learn In This Episode
- Why every comp plan is fundamentally a behavior-shaping system—not a payment structure
- The hidden misalignment created when you pay people on outcomes they don’t control
- How to identify the specific actions that actually move your business forward
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Welcome to The Ray J. Green Show, your destination for tips on sales, strategy, and self-mastery from an operator, not a guru.
About Ray:
→ Former Managing Director of National Small & Midsize Business at the U.S. Chamber of Commerce, where he doubled revenue per sale in fundraising, led the first increase in SMB membership, co-built a national Mid-Market sales channel, and more.
→ Former CEO operator for several investor groups where he led turnarounds of recently acquired small businesses.
→ Current founder of MSP Sales Partners, where we currently help IT companies scale sales: www.MSPSalesPartners.com
→ Current Sales & Sales Management Expert in Residence at the world’s largest IT business mastermind.
→ Current Managing Partner of Repeatable Revenue Ventures, where we scale B2B companies we have equity in: www.RayJGreen.com
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Transcript
If you can't name the exact behavior that your comp plan is designed to incentivize you, scrap it.
Speaker A:Like just pay him a salary.
Speaker A:And I, I really mean that because your sales comp plan has one purpose and one purpose only, and it is to change behavior.
Speaker A:That's it.
Speaker A:It's a communication tool.
Speaker A:It's an asynchronous, systematic communication tool that tells your sales rep, the person that you're hiring, the person you've got on your team, exactly what you want them to do.
Speaker A:And if it doesn't do that correctly, then it's, it's just wasted money, right?
Speaker A:Like it's, it's actively creating misalignment in your business.
Speaker A:I've designed a lot of comp plans over the years.
Speaker A:I've designed simple ones where you've got straight commission, maybe a few step up tiers or something like that.
Speaker A:I've done really complex ones where you've got, you know, portions of sales going into a, you know, a pool that are distributed based on performance of, of the individual relative to other people.
Speaker A:And you've got lead distribution baked into it.
Speaker A:And you know, all like team contingent payouts.
Speaker A:Like I've, I've done many of these and the lesson I come back to every single time is what behavior does this get me?
Speaker A:Like, that is what I'm thinking every time I'm designing an incentive within the comp plan.
Speaker A:And most people who are, are fairly new to comp plans.
Speaker A:Like, skip past that question.
Speaker A:Like, they look at every, like what everybody else is paying and they try to match it or they make an assumption, they bake it into the plan, they find out a few months later, hey, we're, we're paid a bunch of money for some behavior that we don't actually want.
Speaker A:Or you're getting the behavior that you want.
Speaker A:You've got a sales rep who's pissed off because they're not making any money out.
Speaker A:I'll give you an example.
Speaker A:I, I talk to a lot of MSP owners and they're, they're hiring BDRs or hiring SDRs to do their outbound prospecting.
Speaker A:And one of the first things they, they think is, well, we should pay them a commission based on closed deals.
Speaker A:And the logic goes if we pay them on the outcome, they're going to set better appointments, right?
Speaker A:Because they've, they've got skin in the game.
Speaker A:They're, they're thinking through the pipeline.
Speaker A:We've got complete congruency.
Speaker A:Like they're tied to the company outcomes and I'm telling you, this virtually never works the way that you think it will.
Speaker A:Why?
Speaker A:Because what is the exact behavior that the BDR is going to change on a phone call based on whether the deal eventually closes or not?
Speaker A:Right?
Speaker A:Like, think about it.
Speaker A:They're dialing, they're making 50, 70, 100 phone calls a day and they're trying to set an appointment.
Speaker A:What can they actually do differently when they're about to make a phone call that's going to lead to that deal getting closed?
Speaker A:And you might say, well, they'll qualify better.
Speaker A:And okay, like maybe.
Speaker A: But guys, it's: Speaker A:Like, you've got AI, you've got a million enrichment tools.
Speaker A:If somebody's not in your market, they shouldn't be on the list to begin with.
Speaker A:So qualification at the point of a cold call is not really the lever that you think it is.
Speaker A:And the amount of money that you pay for that really isn't that high.
Speaker A:Like, there are a million ways to get a qualified list in your bdr, calling qualified prospects to begin with that don't include forking out a bunch of money on commission later.
Speaker A:So beyond setting the appointment and making sure that the prospect actually shows up, what can the BDR actually control in very little.
Speaker A:When you think about it.
Speaker A:The salesperson is the one who's going to run discovery.
Speaker A:They're going to build the proposal, they're going to deliver the presentation, they're going to ask for the sale, close the deal, get the contract, collect the payment in the sdr.
Speaker A:BDR isn't touching any of that.
Speaker A:Paying them on the outcome of the deal doesn't change their behavior.
Speaker A:It actually creates misalignment.
Speaker A:Now real quick, if you, if you like breaking down like comp structures and actually applying this stuff, I go deeper in my newsletter.
Speaker A:You can sign up@raiseemail.com completely free.
Speaker A:So here's where the misalignment really shows up.
Speaker A:Say you've got a terrible sdr, bdr, whatever.
Speaker A:For the sake of today, we're going to, we're going to say bdr, who's barely setting any appointments, but you've got a killer for a salesperson.
Speaker A:And they, they can create opportunities from things that probably shouldn't have been opportunities.
Speaker A:Well, now you've got an underperforming BDR and they're getting a windfall in commission.
Speaker A:They're making money because the salesperson is closing deals and they're still not hitting their activity numbers.
Speaker A:They're not hitting their results.
Speaker A:And that's a complete Misalignment, you're paying for something you are not getting.
Speaker A:Or you could flip it around and I've seen this a lot say you've got a BDR who's crushing it.
Speaker A:They're setting appointments, they've like they're coming in hand over fist every day.
Speaker A:But you've got a shitty salesperson taking those meetings and they can't do anything with them.
Speaker A:Right.
Speaker A:They couldn't close the front door if they tried.
Speaker A:So your SDR is putting up numbers on the scoreboard, they're making the calls, they're getting the appointments or getting people to show up.
Speaker A:But because you tied comp to the closed deals, they're not making as much money as they should.
Speaker A:How do you think they're going to feel about that?
Speaker A:Right?
Speaker A:Like both of these scenarios come back to the same root problem.
Speaker A:You paid on something outside of that BDR's control.
Speaker A:Should you pay on set appointments or sat appointments?
Speaker A:Well, like can the, can the BDR influence whether the prospect actually shows up?
Speaker A:Sure, they can do confirmation call, they can shoot an email, they can shoot a text.
Speaker A:They can do other things to get that person in the seat.
Speaker A:They, that is within their control.
Speaker A:That's a behavior that you actually want.
Speaker A:They can influence it.
Speaker A:That's something that you want to incentivize.
Speaker A:And listen, these are just examples like the, the overarching principle here is really simple.
Speaker A:Every element of your comp plan in sales, probably, probably anywhere but specifically in sales, should be answerable with one question.
Speaker A:What behavior am I incentivizing by doing this?
Speaker A:And if you can't answer that, then the comp plan isn't designed effectively.
Speaker A:And this is why this matters so much.
Speaker A:A well designed comp plan is really one of the highest leverage moves you can make as a business owner.
Speaker A:You, because you do the deep work one time, you sit down, you do the analysis, you get the design right and it produces results for a really long time.
Speaker A:That is leverage output to input ratio, right?
Speaker A:So you do this right one time, it's going to pay dividends forever.
Speaker A:The salary commission ratio, different layers of commission, where the goal set are.
Speaker A:Are you incentivizing people to sandbag their sales or are you incentivizing them to maximize their sales?
Speaker A:Like all of that can be baked into a comp plan.
Speaker A:And it all comes down to one question.
Speaker A:What is the behavior that changes as a result of the plan that you're designing today?
Speaker A:And that is the fundamental aspect of designing a really good comp plan.
Speaker A:As simple as it sounds so hope it helps.
Speaker A:Adios.
