I recently got into a heated discussion with our VP of Sales and CEO over the wording and clarity of a comp letter, specifically around expectations, territory, and how spiffs are applied. It escalated to the point where I was told “many companies don’t even use comp letters.” That surprised me. So, I’m turning to masses for perspective: Do you receive a formal comp letter? How often does it get updated or reissued? (Annually? Quarterly?) What’s typically included? (Quota? Territory? Commission structure? SPIFFs/Incentives?) Appreciate any insight you can share. Trying to understand if I’m way off base or if I need to go back up the food chain.
I’ve never heard of a place that doesn’t issue comp letters. They’re issued once a year at the start of the fiscal. They outline my territory, base/ comp, comp rate, quarterly targets and anything else I’ll be comped on (services or new logos). SPIFFs are usually called out towards the end of the year/ quarter and we usually receive an addendum to our com plans. So my advice: if it isn’t written down anywhere go find another job. They’re trying to rip you off
I think that the term "comp letter" may not be used everywhere - but what's important is that your plan should be 100% documented. I wouldn't get into an argument about how it's documented - but it seems obvious why it's important for everyone that it's clearly written out and agreed to prior to the pay period (month, quarter, year, etc). Otherwise they're just asking for a dispute. Are they pushing back on that? In my experience, it depends a lot on whether the CEO has a sales background. Non-sales CEOs sometimes really struggle to accept that in many orgs, the top tier of salespeople will earn more take-home pay than the CEO and VP of sales - and that generally comes due to accelerators, SPIFFs, etc.
Yes, the company I work for has a comp letter, and it is updated with all the information that you listed at least 4 times per year
Absolutely there should be a comp letter. Issued Annually. I've seen where spiffs can be issued Quarterly or as a bonus to try and incentivize deals to come in earlier. That is usually told before the end of the prior quarter or early in the new quarter. Your territory is usually not in the Comp letter but reflected in your CRM or directed by your Regional Manager - because that can change throughout the year depending on someone leaving or gaps in the territory or vertical. But Quota, any year long SPIFFS/Incentives absolutely are issued each year. That's usually why Q1 is so slow - nobody wants to work on brining in deals when they don't know how much they are going to be compensated for.
If it's not in writing, it's not real. Huge red flag.
Whelp, that likely explains that chaos of my last org....they did not have a comp letter...I mean, let's be honest, they had reps set their quotas (they did it in stealth mode, but was fairly obvious)...it was also mid June before they rolled out FY goals...
Every serious sales org I’ve worked for had a comp plan. The absence of one would be concerning as it would imply leadership either doesn’t value and/or understand sales professionals and how they fit in the sales process.
Hey there. Just to clarify, whoever said "Many companies don't even use comp letters" is probably way out of their depth in whatever leadership role they are in. Compensation plans should be issued either quarter or annually, and you should have the ability to have all your questions answered. This not only benefits you, but it absolutely benefits the organization. Comp plans are designed to drive specific behavior from employees that lead to positive business outcomes for the organization. It's that simple. If the alignment is off, or worse, unknown, those positive outcomes are way less likely to happen. Sounds like unfortunately you're organization is running with the bush league of sales managers. PS, spiffs don't always have to be in there they can be managed one off but the plan should allow you to clearly calculate what you'll earn based on the volume of deals/business, etc you bring in. Heck there's even a whole category of software companies (commission management) designed to help with the implementation and management of this...