A Comp Plan Is Also a Measurement Plan
At a large wireless carrier, every retail sales rep in a store was assigned the same individual sales quota. Performance was measured by how each person performed against that number. In a typical store about two reps consistently exceeded it, about two fell short, and a few landed in between. If the stronger reps kept beating the target, their results could gradually raise the quota for the entire store over time. The high performers were effectively making the bar higher for everyone else, including themselves.
Coming out of COVID the company switched the stores to a team compensation plan. The stated goal was to reduce the imbalance and stop individual results from driving the store target higher. On paper it looked like a clean fix for an unfair system.
It also changed what leadership could see. Once pay was tied to the team total, individual contribution became harder to isolate. Managers lost a clear, ongoing view of who was driving results and who was not. Some of the stronger reps moved into other channels where individual performance was rewarded. Others left for outside opportunities. The plan solved one problem but created more.
I was part of a team that later built a way to restore individual visibility while the team plan was still in place. We normalized each rep’s sales by the hours they actually worked so people on different schedules could be compared fairly. We tracked several metrics and looked for outliers. The system ran daily and each rep received an email showing where they stood while Leadership got a Tableau dashboard. The tool let managers see individual performance again.
When the company eventually ended the team quota adventure and returned everyone to individual compensation, the measurement system was scrapped along with it. The experiment was over, so the workaround was no longer needed. Consequently, the channels sales performance improved noticeably.
The broader lesson is straightforward. A compensation plan is also a measurement plan. The metrics you pay on are the ones people optimize and the ones leadership can most easily track. When you change the plan, you change both the behavior and the information available to managers. What you stop measuring clearly tends to become harder to manage. In this case the move to team pay reduced one source of unfairness and simultaneously reduced the ability to tell strong individual performers from weak ones. The later measurement system was an attempt to recover that visibility without fully abandoning the team structure. Once the company reversed course, both the incentive design and the visibility tool disappeared together.
Incentive changes are rarely neutral. They redistribute both rewards and information. Before making the switch it is worth asking what you will no longer be able to see clearly, and whether that loss is acceptable.
Originally published on LinkedIn.