What is a Long-Term Incentive Plan?

Businesses need incentives to attract and retain talent. A paycheck is one obvious type of incentive, but at the end of the day, any workplace can provide a paycheck. The real challenge for business owners is finding incentives that offer real value outside of simply allowing an employee to earn money for hours put in.

For many business owners, the solution to this problem is found by providing commission-based incentives. These are payments made for achieving certain items like closed deals. A commission-based strategy is often used as part of an overall long-term incentive plan, and it adds value because it pays extra for achieving goals rather than just clocking in for the day. In a nutshell, it incentivizes employees to work harder to receive bigger rewards.

Designing Commission Plans for Sales Development Representatives

One issue that you may face as a business owner is how to develop commission plans for different roles in your company. Specifically, the delineation must be made between sales representatives and account executives who close deals and sales development representatives (SDR) who qualify leads.

While creating a commission plan for account executives and traditional sales representatives is fairly straightforward, designing a good SDR commission plan is a bit more complicated. Because SDRs are typically tasked with finding and qualifying leads as opposed to finalizing deals, should they receive an equal split of a sales commission? Should their commission be separate entirely? Should they receive a lower commission compared to the closer? All of these questions and more need to be asked when designing a good SDR commission plan.

Every Business is Different

There’s really no right or wrong answer to the questions posed above as every business is different. In the end, your goal needs to be focused on incentivizing the achievement of goals based on role and capacity. How you lay out your long-term incentives using commission payments is up to you, but you want each employee to have a reason to work harder based on the reward that is available.

Read a similar article about commission management here at this page.