3. Plan Must Address Both Strategic And Governance Issues

A top-notch compensation policy should address issues of both strategy and governance, DiMisa said.

From a strategic standpoint, DiMisa recommends considering: job roles in the marketplace, target pay levels, the mix of base and variable pay and the incentive structure for sales reps that exceed their quotas. 

And from a governance standpoint, DiMisa said partners should focus on quota setting and allocation, cost of sales, who’s eligible for variable pay, and discounting policies.

“You can design the best compensation plan in the world, but if you don’t have the right governance practices in place, if you don’t have the right quotas, that will make your compensation plan appear to be broken,” DiMisa said.