Over a company’s lifetime, the person or team responsible for sales compensation will likely change multiple times.

In the early days of a company, it’s common for commission payouts to be calculated based on proximity to sensitive pay information and the company’s sales data.

That could be a sales operations manager who knows the CRM data like the back of their hand, a finance person who tracks sales goals for reporting, or an accountant who’s good with spreadsheets and already knows all the payroll numbers.

As companies mature, the sales compensation process improves. Still, the owner of this program frequently stays in one of these teams — revenue operations, finance, and accounting — based on their legacy experience. Different roles and teams bring different skill sets and strengths, so sales compensation ownership varies from company to company.

A sales compensation manager could be its own individual role, or one piece of a larger compensation planning function connected to the sales corp, based on the size of company and sales team.

According to a sample of our customer data, as companies grow, the leverage of their operations teams grows, and the number of payees per ops person grows significantly. On the other hand, smaller companies have more ops personnel relative to payees. This is likely because operations roles are less specialized at smaller companies. — Jacob Sperry, VP of Business Operations & Strategy, CaptivateIQ

In this article, we’ll explore who owns sales compensation administration today and, what it means to be a sales compensation manager, and most importantly, who should be the owner of this mission-critical process.

Sales Compensation Management and Admin Processes

For anyone who’s managed and administered a sales compensation program — that is, ensuring plan participants’ payouts are calculated promptly and accurately in line with specific regulations— you know all too well that commission operations cover so much more than calculating payouts and letting the payroll team know before their deadline.

Managing a sales compensation program is no easy feat. From target setting to designing plans to facilitating payment approvals on statements, it's a complex and time-consuming process that requires diligence and accuracy.

We can simplify this unruly process into five key tasks, or process inputs, that will power reliable payout calculations for a sales compensation manager, incentive compensation manager or sales leader.

Your sales compensation strategy includes these key processes:

1. Set overall sales targets
2. Set individual sales targets
3. Set individual compensation ranges
4. Design sales compensation plans
5. Administer compensation plans (process commission calculations)

It is precisely the breadth of these inputs to the actual plan calculation that result in the administrator of compensation plans sitting on so many different teams at a company. Since there are so many parties involved in the process, where the calculation is performed can be a natural appendage to different teams. — Jacob Sperry, VP of Business Operations & Strategy, CaptivateIQ

Who are the people who most often perform each sales compensation task?

As we indicated earlier, the sales compensation process is a complex operation that often requires collaboration between sales leadership, sales operations, finance and accounting, and people/talent teams.

This table shows the most common owners across these five tasks — based on a sample of our customers.

As you can see, each comp program will likely leverage sales leaders, c-suite, and other teams across the sales organization.

While a sales compensation manager will likely be tasked with designing and monitoring the compensation structure, it is a role that requires you to collaborate closely with other departments and leadership.

Tip: A good candidate for a sales compensation manager or similar job title should have experience in different functions of the sales organization and consistent project management expertise.

Sales Compensation Management: Who Does What?

A key challenge in compensation planning is in assuring that the right stakeholders enter the process at the right time.

Here is a breakdown of how and when different team members will function in a compensation strategy.

C-Suite and Sales Leaders

The chief executive officer (CEO) and sales leadership are most heavily involved in parts of the process that cover company targets and quotas.

They are often significantly less involved in setting individual compensation and ongoing plan calculations.

Sales Operations and Admin

Sales operations is a less common owner of tasks, notwithstanding heavy involvement throughout all of these steps. Larger organizations tend to have sales operations teams that own plan designs.

If you're interested in a direct comp manager position, it is likely that this function will sit under the Sales Operations umbrella.

Finance and Accounting Team Members

Finance and accounting teams are closest to the company-level goals and often have the technical expertise to support automating and calculating the most robust calculations.

Human Resources (HR)

Talent (HR) teams are the most common owners of the on-target earnings (OTE) for the sales team, but with heavy involvement from leadership as well.

In summary, a comp manager will work with the following departments on these various tasks:

• CEO and sales leadership: often responsible for major decisions like company-level targets and sales quotas
• Sales operations: often responsible for setting individual targets and designing and administering compensation plans (in collaboration with sales leadership and finance, or for smaller companies, the CEO)
• Finance and accounting: often responsible in ensuring sales meet business objectives while staying compliant and following regulations, and in some cases, responsible for administering plans
• People/Human Resources/Talent: often responsible for overseeing the process of setting compensation levels for individual roles

Together, these four entities help ensure sales teams are compensated appropriately for their efforts.

What is a Sales Compensation Manager?

Companies typically hire a sales compensation manager to build or enhance their sales compensation program.

No matter the specific day-to-day expectations,  an incentive compensation manager will likely manage the various moving parts in sales and any other department to:

• Calculate commissions and manage the commission table
• Identify trends and conduct market analysis to make adjustments to your comp plan
• Report on source datum against performance metrics
• Provide guidance and clarity on sales incentives to leadership

Depending on the stage of the company, the comp manager role will wildly vary.

Here are the different hard skills internal expertise that a comp manager might need for different business types.

Start-up or Agency

If a a start-up business is onboarding an incentive comp role, they are likely looking for a team member to create a pay structure  and incentive program from scratch. This is a key role that will have the chance to design comp plans, recommend tech stacks, and potentially build a team.

A good candidate would likely have a senior-level of hard skill in:

• Building or managing pay structures and comp plans
• Making adjustments to a compensation structure over time due to source datum, market dynamics or new goals
• Preventing compliance issues in regard to legal regulations
• Expert insight on different compensation models and which best serve different business goals
• In-depth reporting capability against growth objectives in the sales commission plan

Small to Mid-Sized Businesses (SMBs)

A later stage company likely has created a pay structure and incentive program over time. Without a dedicated comp manager providing guidance, it's possible that they're commission plan is made up of various systems and financial processes that are misaligned or disorganized.

By onboarding an incentive compensation manager, the company is hoping to transition into a standard way of implementing the commission structure.

A good candidate for a sales compensation manager in this circumstance likely has the following qualifications:

• The ability to audit systems and processes to make adjustments as needed
• An understanding of different commission structures, and how the company's current sales commission plan can be improved
• Recommendations on how to leverage technology to increase clarity and speed when managing your comp plan
• Experience working sales reps in order to motivate sale team members of varying skill sets

Enterprise Corporations

An established organization likely has several employees in each department, including the sales team and HR.

At this stage, the company has had the time and necessity to develop a commission management process based on calculation rules and legal regulations.

The goal of onboarding an incentive compensation manager now would be to scale their systems and processes with the power of automation, efficiency, and internal expertise.

A good candidate will need both strategic and commission management experience to play a key role in:

• Aligning business goals with individual sales targets.
• Seamless integration of various systems and automation at scale
• Using a keen attention to detail to prevent miscalculations and augment solution design
• Establishing trust across the organization and standardizing process management
• Reporting on performance and earnings by building compensation spreadsheets and pivot tables

Who should own your sales compensation processes?

It’s rare for a single role or team to truly own sales compensation end-to-end. It’s a collaborative, high-impact process that draws on the talent, resources, and expertise of many different teams.

Ownership will vary based on your team’s background and experience. A company with a CFO with a strong background in supporting revenue teams can be a great fit and provide additional segregation of duties and oversight. On the other hand, a sales operations team close to the sales data could enable more automation and provide additional benefits, such as “feeling the pain” when plans are overly complex — giving a strong voice to simplifying and optimizing sales compensation plans.

More important than the hierarchical ownership of this impactful program is the cross-functional collaboration and teamwork. A successful sales compensation owner needs to consider and weigh your organization's different points of view and priorities. All of these voices should be heard so the best possible sales compensation can happen — one in which payouts are fair, accurate, and motivational.

Enhance Your Commission Program with CaptivateIQ

At CaptivateIQ, we believe that compensation program leaders and comp managers need both flexibility and control to adapt incentive compensation to suit changing business needs and use it to their advantage.

We needed a solution that was agile, and could be owned by finance professionals that were very comfortable in spreadsheets. We’re a small but mighty team that manages comp for 200+ sellers. — Michael D., Senior Revenue Operations Manager, Gong

CaptivateIQ can help you design the right sales compensation plans for your business, regardless of complexities. Our agile compensation management platform supports rich data outputs, transparent rep statements, and approvals so businesses can organize and streamline the sales compensation process.