Let’s be honest. The old playbook for sales comp is, well, a bit dusty. It was built for a world of butts in seats, handshakes in lobbies, and activity metrics that felt easy to count. But that world has fractured into a hybrid model—a mix of home offices, co-working spaces, and the occasional HQ visit. At the same time, there’s a powerful shift toward valuing outcomes over sheer activity.
This creates a fascinating tension. How do you pay people fairly when you can’t see them? How do you incentivize the right results, not just the loudest hustle? Designing an ethical sales compensation plan today isn’t just about math; it’s about building trust in a fragmented environment. It’s about aligning what’s good for the business with what feels right for the human on the other side of the screen.
The New Landscape: Hybrid Work and the Outcome Shift
First, let’s frame the challenge. Hybrid work isn’t just a location thing. It dismantles the old, often unspoken, ways we monitored performance. The “first in, last out” badge of honor means nothing. The visible hustle is invisible. This can lead to what I call “presence paranoia” from managers and “visibility anxiety” from reps. An ethical plan must bridge that trust gap from the start.
Then there’s the move to outcome-based performance. We’re finally realizing that 100 cold calls mean little if none convert into valuable customer relationships. The goal is to reward the results that truly matter: customer lifetime value, solution adoption, net revenue retention. But here’s the rub: outcomes can be lagging indicators. A rep might be doing brilliant, foundational work for a quarter with no commission to show for it. An ethical plan has to support that journey.
Core Principles of an Ethical Compensation Plan
So, what anchors an ethical plan in this new reality? Think of it as building on three pillars: fairness, transparency, and alignment.
1. Fairness Beyond the Territory Split
Fairness used to be about who got the plumb geographic territory. Now, it’s more nuanced. It means accounting for variables outside a rep’s control in a hybrid, outcome-driven model. For instance, does a rep inheriting a mature account from a predecessor have the same quota as one building a greenfield territory? Probably not. Ethical design builds in adjustments for market potential, account maturity, and even product line complexity.
It also means ensuring hybrid work doesn’t create two classes of citizens. The rep who chooses to be in-office five days a week shouldn’t have an unfair advantage in accessing leadership or casual coaching over the rep who works remotely. The plan—and the culture—must level that playing field.
2. Radical Transparency (No Fine Print)
If a rep needs a spreadsheet, a lawyer, and three managers to interpret their comp plan, it’s failed. Ethical transparency means the plan is simple enough to be understood, yet detailed enough to be comprehensive. It’s published in plain language. It’s accessible anytime. Changes aren’t sprung mid-cycle. This transparency builds trust, the absolute currency of a hybrid team.
3. Alignment with Business AND Customer Health
This is the outcome-based heart of it. The plan must incentivize behaviors that lead to sustainable growth, not just a quarterly spike. That means weighting metrics that reflect customer success—like net revenue retention (NRR) or product adoption—right alongside new logo acquisition. When you pay for customer health, you align the rep’s goals with the company’s long-term success and the customer’s actual outcome. It moves the relationship from transactional to partnership.
Building the Plan: Practical Components and Structures
Okay, principles are great. But how does this look on paper? Let’s get practical.
Balancing the Pay Mix: Base vs. Variable
The classic 60/40 or 50/50 split might need a rethink. With a focus on longer-term outcomes, consider a slightly higher base salary. This provides stability, reduces frantic short-term gaming, and shows good faith in the rep’s strategic role. The variable piece then rewards achieving those key outcome metrics.
Choosing and Weighting the Right Metrics
Ditch the vanity metrics. Here’s a sample framework for weighting commissions:
| Metric | What It Measures | Why It’s Ethical & Effective |
| Booked Revenue / ACV | New business closed | Directly ties to growth; keep it simple. |
| Net Revenue Retention (NRR) | Growth/retention of existing customers | Rewards nurturing and expansion, not just churn-and-burn. |
| Gross Margin | Profitability of deals sold | Prevents discounting wars and protects company health. |
| Strategic Product Adoption | Usage of key platforms | Ensures the customer realizes value, leading to stickiness. |
You might weight these as 50% New ACV, 30% NRR, and 20% Gross Margin, for example. The exact mix depends on your business stage.
Incorporating Team and Company Goals
Pure individualism can be toxic, especially in hybrid settings where collaboration is oxygen. A slice of the variable comp—say, 10-15%—should be tied to team or company-wide goals. This fosters knowledge sharing, helps onboard remote colleagues, and reminds everyone they’re rowing in the same direction.
Avoiding the Common Ethical Pitfalls
Even with good intentions, plans can go sideways. Watch for these traps:
- The Clawback Ambush: Aggressive clawbacks on commissions if a customer churns quickly feel punitive and can encourage reps to hide problems. Better to pay commissions on collected revenue and use the NRR metric to reward retention.
- Moving Goalposts Mid-Game: Changing quotas or territories mid-cycle because someone is over-performing is the fastest way to destroy trust. It screams, “We didn’t plan for your success.”
- Ignoring the Support System: In an outcome-based model, sales development reps, customer success managers, and solution engineers are critical. Their comp must be ethically aligned with the outcomes too, or internal conflict will undermine everything.
The Human in the Hybrid Model: Final Thoughts
At the end of the day, a compensation plan is a communication tool. It tells your team what you truly value. In a hybrid world where watercooler chats are rare, that message needs to be crystal clear and fundamentally just.
Designing ethically isn’t about being soft; it’s about being smart. It’s recognizing that a plan perceived as fair will drive engagement, reduce turnover, and attract top talent who want to be measured on their impact, not their optics. It builds a culture where people feel trusted to do their best work, wherever they are, focused on the outcomes that matter most.
The future of sales comp isn’t just a formula. It’s a covenant. A promise that if you deliver real value for our customers, we’ll recognize and reward that contribution—fully, fairly, and without you having to perform visibility theater. That’s a plan worth signing up for.
