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Incentive compensation is the variable income sales reps earn based on their performance in addition to their base salary, and there are a lot of ways to go about it. Discover everything you need to know to get it right. Incentive compensation is the variable income sales reps earn in addition to their base salary.
Employers often structure these incentive plans as a percentage, like 5% of all the deals each sales rep closes. So if a sales representative's employer offers this incentive-based compensation and the worker is responsible for $100,000 in sales over the year, her incentive payment would be $5,000.
Incentive compensation is a form of variable compensation in which a salesperson's (or other employee's) earnings are directly tied to the amount of product they sell, the success of their team, or the organization's success.