The "Levers & Kickers" Comp Plan (And Why It Fails)
By Shawn Hamilton, M.S., DBA(c) Shawn Hamilton is a leading sales leadership advisor and doctoral researcher at the University of Houston, specializing in Sales Leadership.
The "Levers & Kickers" Comp Plan (And Why It Fails)
It's the beginning of a new quarter, and as a sales leader, you have a problem. You need to grow revenue, but you also need to increase profitability, sell more of a new product, and expand into a new market segment.
So, what do you do? You call a meeting with Finance and HR and design the "perfect" sales compensation plan.
It looks something like this: "The rep gets a 70/30 base/variable split, with 50% of the variable tied to total revenue, 20% to gross margin, 10% to new product sales, and 20% to new logo acquisition. Plus, there's a 1.2x kicker for deals over $100k and a 1.5x kicker for multi-year contracts."
You've built a masterpiece of financial engineering. You've created a lever for every single business priority.
And in doing so, you've guaranteed your team's failure.
The Myth of the "Perfectly Aligned" Incentive
This kind of plan—what I call the "Levers & Kickers" model—is built on a fundamental misunderstanding of human motivation. It assumes salespeople are like calculators: if you just program the right formula, they will logically compute the most profitable action in every scenario.
But salespeople aren't calculators. They're human. And humans don't operate on spreadsheets; they operate on belief.
This is the core of "Expectancy Theory," a foundational concept in organizational psychology. Researched by Victor Vroom and later expanded, it states that a person's motivation to act is a function of three beliefs:
Expectancy (Effort -> Performance): "If I try, can I hit the target?"
Instrumentality (Performance -> Outcome): "If I hit the target, will I get the reward?"
Valence (Outcome -> Value): "Do I even care about the reward?"
Your "Levers & Kickers" plan breaks the very first link in this chain: Expectancy.
When a rep looks at your complex formula, they can't answer the simplest question: "If I make this call, how does it help me hit my number?" The link between their effort (the call) and their performance (the quota) is hopelessly obscured by kickers, levers, and gates.
When a rep can't see a clear path, they don't get "perfectly aligned." They get confused. And a confused salesperson either freezes, focusing on nothing, or they default to the one thing they do understand, ignoring the other 90% of your plan.
Actionable Takeaways: The Case for Radical Simplicity
Your compensation plan is not a strategy document; it's a communication tool. Its one and only job is to provide clarity.
The "One Thing" Rule. A sales team can only focus on one primary objective at a time. Is it new logos? Is it net revenue? Is it gross margin? Pick one. Make that "one thing" 80-100% of the variable compensation.
Use SPIFs for Everything Else. "But Shawn," you'll say, "what about our new product?!" That's what a SPIF (Sales Performance Incentive Fund) is for. Want to sell more of Product X this quarter? Run a 60-day, cash-based SPIF for it. This creates intense, short-term focus without diluting your main plan.
The "Tattoo Test." Could your sales rep tattoo their comp plan on their arm? Could they explain it to you on a whiteboard in 30 seconds? If the answer is no, your plan is too complicated. The best plans are the simplest: "Sell X, get Y."
Stop building spreadsheets and calling them compensation plans. Give your team a target they can see, a path they can believe in, and a reward they value. The rest will take care of itself.
References
Vroom, V. H. (1964). Work and motivation. John Wiley & Sons.
