Perspectives from
the work itself.

Three structural flaws appear in nearly every broken compensation plan: team-based metrics that sever individual accountability, working-capital-style metrics most reps can't define, and inadvertent rewards for bad behavior — like extending payment terms to avoid past-due flags.

At a global manufacturer, one region's incentive plan penalized past-due receivables, but measured them incorrectly. Salespeople responded rationally: they extended payment terms to shift balances from “past due” into “current.” Bad metrics drive smart people toward bad behavior. The fix was replacing the receivables metric with Days Sales Outstanding tied to individual accounts. Now salespeople were incentivized to reduce payment terms and collect faster — not just reclassify debt.

In most companies, the comp plan was designed by someone who understood the finance objective but not the front-line behavior it would produce. That is the fundamental design error.

In most sales organizations, overachievers — those exceeding budget by 10%+ consistently or repeatedly — generate 80–90% of all incremental growth. Yet most companies hire within rigid salary and bonus bands that attract and retain average talent.

A great salesperson can be 2–3x more productive than an average one in revenue and profitability. These are the people worth investing in. At a large manufacturer, I built an uncapped Gross Profit-based kicker in addition to the core sales incentive. About 10% of the sales reps earned an extra 40% to 100% of their base salary on top of the core incentive pay.

Rigid comp structures cap ambition before it starts. Only 5–10% of the salesforce may ever trigger an uncapped kicker, but they're exactly who drives most of the growth.

At a global manufacturer, one region's incentive plan penalized past-due receivables, but measured them incorrectly. Salespeople responded rationally: they extended payment terms to shift balances from “past due” into “current.” Bad metrics drive smart people toward bad behavior.

The fix was to replace the receivables metric with Days Sales Outstanding tied to individual accounts, with a target to improve DSO vs the prior period. Now salespeople were incentivized to reduce payment terms and collect faster, not just reclassify debt.

Metric design is not an accounting decision. It's a behavioral one.

When I rolled out the new sales incentive plan at a €1.5B manufacturer, 50–60 of the 300 salespeople earned no bonus at all. Under the previous team-based plan, they had been earning something every cycle.

A well-designed individual incentive plan does more than reward performance — it reveals it. In most cases, these were reps who had been quietly underperforming for years, masked by team metrics. The conversations it forced about coaching, role fit, or transition were overdue.

Comp plans aren't just compensation tools. They're performance management tools, whether you intend that or not.

One region of a €1.5B manufacturer included “working capital” in its sales incentive plan. Sounds reasonable — until you realize most salespeople had no clear understanding of what working capital actually was. The metric existed on paper but drove no behavior.

When I rebuilt the plan, I replaced it with Days Sales Outstanding measured at the individual account level. DSO is tangible: a number of days, attached to specific customers, that a salesperson can directly influence. Importantly, there was broad training on understanding of the DSO metric, which was also new to many salespeople and even some Finance reps. Then monthly reviews of DSO per team and per sales rep followed.

Sophistication in metric design isn't a virtue if it disconnects the rep from the lever. Translate finance KPIs into rep-actionable terms, or don't bother.

At a ~$600M services company, I tied the monthly bonus payout to a specific requirement: every gross profit improvement had to be logged as an opportunity in Salesforce, then validated monthly before payment. The validation requirement quietly transformed data quality across the entire commercial organization.

Reps logged opportunities in real time because their bonus depended on it. Pipeline visibility improved. Forecasting got tighter. Win-loss analysis became possible for the first time. None of this was a separate initiative: it was a byproduct of the comp design.

Process discipline can be expensive to enforce, or it can be self-enforcing.

Most sales incentive plans bake growth into the primary target. At a large global manufacturer, I deliberately separated the two. The main bonus — 100% of variable compensation — was earned by retaining prior-year gross profit and improving the DSO metric. Growth lived in a separate uncapped kicker based on bringing incremental gross profit.

This structure communicates two distinct priorities: don't lose what you have, then go win more. It also protects the company from sandbagged forecasts and makes goal-setting cleaner.

Plan design isn't just math: it's a statement of priorities.

A six-month feedback loop is too slow to change behavior. By the time a salesperson receives a payout, they can't clearly connect it to specific actions from months ago. Frequency of reinforcement matters as much as the size of the reward.

When incentive plans pay monthly or quarterly, reps understand exactly which behaviors moved their bonus. Semi-annual payouts create a temporal disconnect that undermines the behavioral purpose of the comp plan entirely.

If your goal is behavior change, the payout cycle is part of the design. Not an administrative afterthought.

Owning a P&L isn't reading the monthly statement and asking why margin slipped. P&L ownership begins with a sober read of where the company can credibly win: which segments and customers match its operational capabilities and innovation strengths against competition.

At a large manufacturer, we grew EBIT by 25% over 2.5 years, because we sharpened the strategy around our true competitive advantages, restructured the sales organization to pursue those segments deliberately, and actively supported reps with the pricing, technical, and account resources to convert strategy into deals.

P&L ownership is choosing where to compete, building the organization to execute, and standing behind it daily.

Based on my personal P&L ownership experience and looking at senior leaders entrusted with P&L ownership, I've noticed a dangerous pattern: sometimes, ambitious targets are mistaken for strategy. Sales is asked to sell more. Operations — to be more productive. Procurement — to cut costs. These targets are given without a connecting strategy.

Without a clear answer to how the company will win and what it means for the various functions within a company, these become competing mandates that optimize one metric at the expense of another.

Real strategy is honest competitive assessment, clarity on what customers value, and deliberate alignment of organization, resources, and metrics behind it. With that discipline in place, we grew EBIT by 25% at a large B2B manufacturer, grew sales by 30% at a services company.

Targets are aspirations. Strategy is how you earn them.

At a mid-size management services company, new customer acquisition had been the primary growth engine for years, yielding 2–3% annual growth. With a strong share-of-wallet program implemented, the focus shifted to existing accounts: what percentage of a customer's relevant spend did we actually own, and how do we grow it?

Most B2B companies dramatically underestimate the revenue sitting inside their current customer base. Pair that with a cross-sell motion, and it is quite possible to grow with existing (even already large) customers by 10–20% and over, with much less effort than a new customer acquisition requires: you already know the customer, the customer already knows your product/service, reliability, quality, etc.

Share of wallet can often be the biggest, yet most under-utilized, growth engine. This company grew over 20% through share of wallet initiatives within a year.

At a mid-size services company, only the top three customers were buying multiple services. Every other customer (hundreds of accounts) typically used one offering from a wide portfolio. That single observation reframed the growth strategy.

If only your largest customers buy your full portfolio, you don't have a product problem — you have a coverage and sales motion problem. Mid-tier customers rarely refuse additional services; they're simply never asked or sold on them.

The cross-sell opportunity isn't hidden in the data; it's hidden in plain sight, in the gap between what your top customers buy and what everyone else doesn't.

If you're PE-backed and planning an exit in the next 2–3 years, here's a number that should keep you up at night. In mid-market M&A, acquirers can apply up to 2–3 turn EBITDA discount to revenue that isn't backed by signed contracts. Two businesses in the same industry with identical EBITDA can sell at wildly different multiples based on this factor alone.

Run the math on a $10M EBITDA business:

• Informal, relationship-based revenue at 8x = $80M enterprise value
• Contracted, recurring revenue with escalation clauses at 11x = $110M enterprise value

That's a $30M gap: not from growing revenue, not from cutting costs, but from documenting well what already exists.

Having good contract discipline is not easy at all, and it takes the right infrastructure with good standard contracts, internal rigor and well-established processes to execute them, and proper training and regular upskilling of the commercial team. But the ROI is huge.

The hardest dollar to create in a PE portfolio isn't a new sale. It's the one you already earned but never documented.

I've seen businesses lose 8–15% of contract value without knowing it, and most of the leakage comes from what's not written down, not what is. Here are the five most common ways it happens — on an example of a $300M services company:

• No grade or quality specifications. When disputes about material quality have no contractual baseline, the supplier concedes 40–60% of claims to preserve the relationship. At scale, that's $1.5M–$3.5M/year in avoidable write-offs.
• No escalation clause. Without CPI or index-linked pricing, annual increases depend on informal conversations. The result: 0–1% achieved vs. 3% contractual. That's $3.5M–$4.5M walking out the door — every year.
• No defined scope. When the service description is a handshake, scope creep is invisible. If 10–15% of your team's execution time is spent on uncontracted work, you may be donating up to $4M–$8M annually.
• No notice period. A customer exits with zero warning. Stranded equipment, reassigned staff, logistics commitments already made. $50–75K per account, compounding across 15–20 exits a year.
• No assignment clause. Your $300K–$700K/year multi-plant customer gets acquired. New ownership has zero contractual obligation to continue. That revenue simply vanishes.

Companies lose money because they don't do contracts with their customers or because they do bad contracts that don't offer any protection, only obligations. The leakage is silent, chronic, and cumulative.

Most companies treat contract standardization as a legal project. It's not. It's a commercial infrastructure investment that compounds over time.

Here's what actually changes when you move from ad hoc agreements to a standard contract framework:

• Speed to close drops from weeks to days.
• Pricing consistency improves considerably.
• Cross-selling becomes structural.
• Sales enablement accelerates.

The key: standards that aren't one-sided. The customer needs to see clear SLAs, defined deliverables, and transparent pricing formulas. Otherwise, you've built a document nobody will sign.

The best contract infrastructure doesn't slow down your sales team. It arms them.

When business conditions change, and they always do at some point, the contract you signed (or didn't sign) becomes the only thing that matters. Two well-documented cases worth studying:

• Hertz vs. Accenture (2019). Hertz hired Accenture to redesign its website and mobile apps. After 2 years and $32M+ in fees, Accenture never delivered a functional product. The code was riddled with defects, built only for the Hertz brand when it was contractually required to support Dollar and Thrifty as well. Hertz's lawsuit alleged Accenture “deliberately disregarded” the contract scope. The root cause: vague deliverable definitions and insufficient milestone enforcement in the original agreement.
• National Grid vs. Wipro (2017). National Grid hired Wipro for a $140M SAP implementation. The system miscalculated employee pay, devastated procurement processes, and left a backlog of over 15,000 unpaid supplier invoices within two months of go-live. The project exceeded its $290M budget by 30%. National Grid filed suit seeking over $1B in damages but couldn't even sue their project oversight firm (EY) because the language of that contract prevented it. Settlement: $75M.

In both cases, the contract existed but failed to define scope precisely, enforce quality standards, or provide meaningful remedies. Now consider smaller companies running on handshake agreements with no contract at all. Same risks, no recourse whatsoever.

A contract isn't paperwork. It's the only document that matters when everything else falls apart.

Most mid-market companies avoid contracts because the process feels slow, expensive, and likely to create friction with customers. The MSA + Schedule framework solves all three.

The Master Service Agreement handles everything the lawyers and CFOs care about: indemnification, insurance, confidentiality, limitation of liability, IP, termination provisions, dispute resolution, and payment terms. The customer's legal team reviews it once. Once approved, it becomes a standing framework: no need to reopen for each new scope addition.

The Service Schedule handles everything the operations team cares about: specific services, pricing formulas, pickup frequency, grade specifications, SLAs, reporting cadence, and named contacts. The plant GM or operations VP can read it, negotiate it, and sign it — no legal involvement.

Why this matters commercially:

• Adding a new service line to an existing customer = one-page Schedule, same MSA
• Multi-plant customers sign one MSA for the corporate entity, individual Schedules per plant
• The customer's legal review cost is incurred once, not per-transaction

Structure your contracts the way your customers make decisions: legal reviews at the top, operational terms at the site level.

When a PE firm acquires a mid-market company, they inherit the contracts. Or, more often, they inherit the absence of them. Here's what due diligence looks like from the buy side:

• Revenue backed by signed, enforceable agreements with auto-renewal and escalation clauses = recurring and defensible
• Revenue backed by handshake relationships, email threads, and “we've been doing business for 20 years” = at-risk

The difference in how acquirers price these two buckets is up to 2–3 turns of EBITDA. For a $10M EBITDA business, that can be a $20M–$30M difference in enterprise value. Without contracts: you can't accurately analyze customer churn risk; you can't model revenue under escalation; your reps and warranties exposure at exit is undefined; your outside counsel will flag every undocumented customer relationship during sell-side prep.

World Commerce & Contracting estimates that companies lose an average of 9.2% of annual revenue to poor contract management. For larger organizations, it's up to 15%. On a $50M revenue base, that's $4.6M–$7.5M leaking silently.

Your PE sponsor bought the company because they believed in the revenue. Clean contracts are how you prove the revenue believes in them back.

Most B2B service companies renegotiate pricing informally. Once a year (if that), someone has a conversation. The customer pushes back. The account manager doesn't want friction. You settle for a 1–1.5% increase and move on. Meanwhile, CPI is running at 3%+. Your costs are rising. Your margin is compressing. And you have zero leverage because there's nothing in writing.

Run the math across a $200M revenue base:

• Informal negotiation yields ~1.5%: $3.0M
• Contractual CPI escalation at 3%: $6.0M
• Annual gap: $3.0M — every single year

Over 3 years pre-exit, that's $9M in cumulative EBITDA you never captured. And it directly reduces your enterprise valuation at the multiple. It gets worse with legacy accounts. Companies with 10–20 year customer relationships often have 50+ accounts on pricing that hasn't been formally discussed in a few years. Bringing those accounts to current index rates typically recovers $30K–$60K per account: an immediate $1.5M–$3M before any forward escalation kicks in.

The contractual escalation clause doesn't create friction. It removes friction because nobody has to have an uncomfortable conversation. The price adjusts automatically per the agreed formula.

The escalation clause isn't aggressive. It's math. And every year you operate without one, the gap compounds.

One big mistake a company can make is putting an excellent operator into a builder role. Building a pricing or commercial excellence function from scratch is a fundamentally different job than running one.

The operator thrives in defined processes, clear ownership, and ongoing refinement. They optimize what exists. They are excellent and necessary once the foundation is in place.

The builder thrives in ambiguity. They create the playbook before they can follow it. They earn credibility in rooms where they have no authority. They absorb resistance, find quick wins, and stay motivated before the results are visible. They are itching for the next challenge once the function matures and becomes routine.

Most job descriptions for “new” functions are written as if the function already exists. They attract operators. Then companies wonder why the initiative stalls in year one, or why the hire seems frustrated, or why the sales organization never really accepted the function.

Before posting a role, instead of asking: “who is the best pricing professional available?”, ask “who has built something where nothing existed, in a company that didn't want it yet?” That answer will look very different. And it will change how you hire.

At a mid-size services company, Salesforce.com adoption was very low. Instead of enforcing it through policy, I tied the regular sales bonus directly to timely opportunity entries. No entry, no bonus validation. Salespeople will use the tools that pay them. Within months, CRM data quality improved dramatically, which in turn gave leadership better pipeline visibility and allowed the commercial excellence team to support pricing, bidding, and contract negotiations more effectively.

The Sales team won more, and they saw the use to their good-quality entries in Salesforce.com.

Compliance through mandate creates resistance. Compliance through alignment creates habits.

The best incentive plans align rep self-interest with customer outcomes — not against them. When your salesforce earns more by making customers more successful, you've designed something that compounds. When the math runs the other way, you've built something that decays.

Extractive incentive design — where reps earn by taking from customers rather than delivering value — shows up in the data over time as churn, deteriorating NPS, and shrinking wallet share despite short-term revenue spikes. The structural flaw is usually invisible until the damage is done.

Ask this about your incentive plan: if a rep fully optimizes for their bonus, does the customer win too? If the answer is “sometimes” or “not necessarily,” you have a design problem worth solving.

I've redesigned incentive plans at a small multi-location restaurant business, a mid-size services company, and a large global manufacturer, among others. They represented wildly different scales, products, geographies, and salesforces. But we achieved great outcomes each time: revenue and margin improved when individual reward got tightly connected to individual behavior.

It was not the same sales incentive structure in all companies, but the same principles applied: connecting company goals to incentives, using clear personal KPIs, explaining well, tracking and showing the clear connection between the salesperson's performance and their bonus.

Compensation design is not a function of company size: it's a function of human nature. Frontline restaurant workers, B2B account managers, and technical sales engineers all responded the same way to the same principle: clear line-of-sight from action to outcome.

If you're waiting until your company is “ready” for individualized comp, you're already behind.