Individual accountability replaces regional team-based bonuses at a €1.5B global manufacturer
The Situation
Four global regions ran four different sales incentive plans. Europe paid on regional sales plus working capital. India paid on regional sales only. Southeast Asia and Oceania mixed sales budgets with cash collection metrics. Middle East and Africa paid on sub-region sales budgets. All plans were team-based, semi-annual, and disconnected from individual performance. Most salespeople didn't understand the plans. Top performers were silently subsidizing underperformers. The commercial strategy was inconsistent across regions because the incentives that drove behavior were inconsistent.
The Problem
Beyond the fragmentation, the plans were structurally broken. Europe's working capital metric drove no behavior because most reps didn't know what working capital was. Southeast Asia's past-due-balance metric incentivized salespeople to extend payment terms (which mechanically reduced past-due balances) rather than actually collecting faster. Across regions, there was no individual accountability, no incremental upside, and no way to identify or reward the salespeople who were genuinely outperforming.
What I Did
Replaced all four regional plans with a single global structure built on three components. Component 1 (65% of variable comp): individual gross profit target equal to prior-year actual gross profit on the rep's accounts — protect what you built. Component 2 (35% of variable comp): individual DSO improvement target of 10% on the rep's accounts — reduce payment terms and collect faster. Component 3 (uncapped): incremental gross profit kicker paying 1% of base salary for every 1% of incremental gross profit above target — allowing top performers to earn up to 100% of base in bonus.
The Transferable Lesson
Top performers didn't change behavior under the new plan — they had been outperforming the average for years under the old team-based system. The plan didn't create top performers; it stopped under-rewarding them. About 10% of the salesforce earned 40–100% of base in bonuses; about 50–60 reps earned no bonus at all (versus always earning something under team-based plans). Both effects are by design: a good incentive plan exposes performance, it doesn't average it out.