Bonus System for an IT Distributor's Sales Team

The Task

To redesign the bonus system for the sales department. The existing scheme had been in use for several years, but systemic issues had accumulated: managers did not understand how their final bonus was calculated, the calculation took weeks, and disputes arose between the team and the finance department. A new system was needed: one that is fair, transparent, and motivates selling more in the right directions.

What Was Wrong: Diagnostics

• The Calculation Base Was Net Profit

  Managers received a bonus from net profit, into the calculation of which all company overhead was included. A salesperson does not control office rent or accounting costs, yet these affected their bonus.

• Slow and Opaque

  To get the final bonus figure, one had to wait for the full period close and the allocation of all overhead across managers. A manager had no way to independently verify the calculation.

• A Flat Rate: No Incentive to Develop New Areas

  The bonus was calculated at a single rate for all clients and products. It was more advantageous for a manager to work with familiar existing clients than to spend time finding new ones or promoting a new product.

• Potential for Conflict

  Net profit is a shareholder's category, not a salesperson's. When a manager receives a share of net profit, they inevitably feel like a quasi-shareholder, but without shareholder rights and without influence over most of the factors that determine it.

What We Did

• Audit of the current system: studied the existing policy, collected data on managers' sales and gross profit for the period, and calculated bonuses under the old model using actual Q1 2025 data
• Designing the new model: a bonus pool structure split by levels (manager / Head of Sales / CEO pool), differentiated rates of 1–5% by client type and plan achievement, with gross profit (not net profit) as the base
• Testing on real data: applied the new model to actual Q1 2025 data, compared total amounts under the old and new systems, and confirmed the bonus pool remained within budget
• Drafting the policy document: a document containing the bonus pool calculation formula, allocation by level, threshold conditions, rates by client category, and calculation examples for managers

Solutions: Before → After

Result

• Transparency

  Every manager can now independently calculate their bonus from CRM data, without waiting for the period close.

• Fair Distribution

  The 50% plan achievement threshold filters out non-performers. The top manager who achieved 117% of plan in Q1 2025 received a well-deserved bonus.

• Incentive to Grow

  A double rate for promoting a new product creates a direct financial incentive to develop the portfolio rather than working only with established lines.

• Bonus Pool Within Budget

  The new model was tested on actual Q1 2025 data. The total bonus pool amount is comparable to the old system, while the distribution became significantly more equitable.