Director of Sales Bonus

We are looking to restructure our Director of Sales quarterly bonus. Director currently receives a quarterly bonus based upon the growth of overall gross revenue. The bonus is calculated as 1.2% of the variance in current quarter's gross revenue as compared to the same period in the previous year.

We are trying to configure the bonus to focus on outside sales and new business that the sales reps are bringing in. Perhaps determining the bonus on the sales reps new business.

Does anyone have any sort of progam they can share? Thanks in advance.


  • 2 Comments sorted by Votes Date Added
  • Are you trying to base the bonus on new customers or increased revenue or both?
  • We pay a "period" behind (for us that is monthly). We have a "decommission" feature should a sale be cancelled within the first 90 days.  You also have to consider when the commission is deemed earned. For this, you need to CAREFULLY check your state wage laws. There is not a one size fits all answer between states.  In some states, you can require the employee be current and in good standing at the time of payout. In others, the bonus is earned on the last day of the "period", even if not paid out until a later date. Illinois is one that I know is very sticky in this regards.

    As TXHRGuy asked, you have to decide what factors to base the formula on.  Generally what you compensate will be where salespeople direct their most attention.  So you need to weight the formula correctly.   And as with any compensation plan, you should have  formal, written document to protect both sides.

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