Override commission is a compensation model where sales managers or leaders receive a percentage of the commission or revenue generated by their team members. It's an "extra" commission on top of the salespeople's own commission—hence the name "override."
This model is designed to motivate managers to coach, develop, and support their teams, as the manager's income is directly tied to the team's overall performance.
Override commission solves several key challenges in sales organizations:
Manager focus on team development: When managers are rewarded based on team results, they invest more time in coaching, training, and supporting individual salespeople.
Recruiting top talent: Managers with override incentives are motivated to recruit the best salespeople and retain them.
Alignment across levels: The entire sales hierarchy pulls in the same direction when everyone's compensation is connected.
The manager receives a fixed percentage of the team's total sales or commission:
| Element | Value |
|---|---|
| Team total sales (month) | $300,000 |
| Override rate | 3% |
| Manager override | $9,000 |
| Salesperson | Sales | Rep Commission (10%) | Manager Override (3%) |
|---|---|---|---|
| Rep A | $75,000 | $7,500 | $2,250 |
| Rep B | $60,000 | $6,000 | $1,800 |
| Rep C | $67,500 | $6,750 | $2,025 |
| Rep D | $52,500 | $5,250 | $1,575 |
| Rep E | $45,000 | $4,500 | $1,350 |
| Total | $300,000 | $30,000 | $9,000 |
A fixed percentage of all sales regardless of performance:
Override rate increases with team performance:
| Team Quota Attainment | Override Rate |
|---|---|
| Under 80% | 2% |
| 80-100% | 3% |
| 100-120% | 4% |
| Over 120% | 5% |
First-dollar: Override on all sales from the first dollar
Threshold: Override only on sales above a minimum level
| Model | Team Sales | Threshold | Override (3%) |
|---|---|---|---|
| First-dollar | $300,000 | $0 | $9,000 |
| Threshold | $300,000 | $225,000 | $2,250 |
Override across multiple levels in the organization:
| Aspect | Override | Team Bonus |
|---|---|---|
| Calculation | Percentage of sales/commission | Fixed amount on goal achievement |
| Payout | Ongoing | Often quarterly/annual |
| Predictability | Varies with sales | More predictable |
| Motivation | Continuous | Goal-focused |
Typical override rates:
Override alone can make managers passive. Add personal KPIs:
Specify what happens when:
More than 3 levels of override quickly becomes expensive and complex.
Few management levels, higher override rates to the few managers.
Multiple levels, lower rates per level to keep costs down.
Override to pod lead on pod's overall performance, not individual salespeople.
Salesperson closes a $150,000 deal:
| Level | Person | Rate | Payout |
|---|---|---|---|
| Salesperson | Peter | 10% | $15,000 |
| Manager | Maria | 3% | $4,500 |
| Director | Anders | 1% | $1,500 |
| VP Sales | Louise | 0.5% | $750 |
| Total commission | - | 14.5% | $21,750 |
Override commission is an effective tool for motivating sales managers to focus on team development and coaching. By tying manager compensation to team results, you create a culture where success is shared across the organization.
The key is finding the right balance between override rates and other incentives, so managers remain active and engaged in both strategy and daily leadership.
Want to implement override commission? Prowi makes it easy to calculate multi-level commission automatically across your organization. Book a demo to see how we can simplify your commission administration.