A commission model is not just a pay mechanism. It is a management tool that can promote the right behavior patterns, motivate employees and ensure that the company achieves its goals. But many models fail because they are either too complex, too opaque, or cannot grow with the organization. The key is to build a model that is both fair to employees and scalable to the company.
The first step in designing a commission model is to define what it should drive. Do you want more new customers? More focus on retention? Higher average orders? The goal should be clear, because commission rewards exactly what you measure on. An unclear model creates uncertainty and, in the worst case, behavior that runs counter to strategy.
Even an advanced commission model should be able to be explained in two minutes. If a salesperson can't figure out for themselves what a closed deal means for the next paycheck, the model loses its motivating power. This does not mean that you cannot work with tiered commissions, accelerators or baseline, but the rules must be presented clearly and consistently.
A fair model takes into account that sellers have different customer portfolios and market conditions. At the same time, the model must protect the company's payroll budget. This is where baseline and attainment come into play. By setting a base level for when commissions are triggered, you ensure that the reward comes only after real value has been created. Attainment allows performance to be measured relatively so that different quotas can still be compared.
When several people contribute to a sale, conflicts quickly arise about who should get commission. Therefore, the rules must be clear. Should the person who books the meeting have a percentage? Should the team leader have an override? Clear crediting rules create fairness and eliminate internal disputes.
Before a new model is implemented, it should be tested on the sales figures of the past 12—24 months. It gives insight into how the commission would have been distributed and what costs the model would have generated. By simulating the model on historical data, you can reveal whether it is too generous, too restrictive, or frames skewed with respect to the targets.
Manual calculations in Excel may work at first, but they break down as the business grows. Automation is essential to building trust and motivation. With a system like Prowi, the rules can be defined once, after which the calculation runs automatically based on CRM data. The sellers can follow their commission in real time, and management can see that the model is working without errors.
A model that works in an organization with five salespeople doesn't necessarily work when you're 50. Therefore, already at the design stage, you should think about scaling. Avoid special rules for individuals and instead create principles that can be applied to the entire team. The more standardized the model, the easier it is to operate, regardless of the size of the organization.
A fair and scalable commission model is based on three pillars: clear objectives, transparency and technical support. When employees can understand and trust the system, and when management can see that the model supports the strategy and budget, commission becomes an engine of growth rather than an administrative burden.
In other words: make the model simple to understand, test it thoroughly, and make sure it can grow with the company. Then you don't just get a commission plan -- you get an incentive tool that drives results for years to come.