The Commission Plan That Turned Paul's Engineering Team Into the Enemy
Part 1 of 4 — Sales Comp That Doesn't Backfire
Paul had built his automation company the way most engineers build things: carefully, quietly, and with an almost stubborn commitment to getting the details right.
He started the company at forty-four, after fifteen years as a senior engineer at a larger firm in the region. He had a reputation, a handful of clients he'd quietly cultivated over the years, and a philosophy he never wrote down but lived by religiously: never promise what the team couldn't actually deliver. His first hire was an engineer. His second hire was an engineer. His third hire was Kevin, a sales rep who understood, almost instinctively, that in Paul's world, the technical conversation had to come before the commercial one.
By the time Paul called me, the company had twenty-two employees, seven of them in engineering, and a client retention rate he was genuinely proud of. His longest active client relationship was eleven years. He knew most of their operations managers by first name. He had never, in nine years of running the business, had a client ask for their deposit back.
Until he did.
## The Drift Nobody Noticed Until It Was Expensive
For the first seven years, the sales process worked because Paul was still close enough to every deal to catch it before it drifted. Kevin would bring in a prospect. Paul would sit in on the first technical conversation. The engineers would scope the solution. Kevin would close it. The whole thing moved slowly... six, seven, sometimes eight months from first meeting to signed contract. But the work held up, the clients renewed, and the referral pipeline stayed steady.
The problem started when Paul decided it was time to grow past what he could personally oversee. He couldn't be in every room anymore. He had twenty-two people and a business that needed to run without him backstopping every proposal. So he did what most growth-stage founders eventually do: he brought in someone who had built a scalable sales operation before.
The new VP of Sales came from a software company in Toronto. Smart... genuine track record... the kind of confidence that comes from having actually built something before. He looked at Paul's operation and saw exactly what any experienced sales leader would see: no formal commission structure, no individual quotas, no clear performance accountability. He fixed all of that within ninety days. Individual targets. Monthly revenue metrics. Eight percent commission on every deal that closed, paid entirely to the rep.
The engineers stayed on salary, the same as they had always been. Nothing about their day-to-day changed. When Kevin closed a deal, Kevin got a commission cheque. When Sandra spent six weeks designing a custom solution for a prospect Kevin later decided wasn't ready to move forward, Sandra got a Wednesday.
Paul thought it was exactly what the business needed. For about six months, it looked like it was.
## The First Signs
The first signal came from Sandra, one of Paul's senior engineers, with four years with the company and someone Paul trusted completely. She stopped him in the hallway one morning and said, quietly, that the sales team seemed to be in a hurry.
Paul dismissed it. Sales teams are supposed to have urgency.
But over the next several months the complaints got more specific. Engineering was getting pulled into preliminary solution calls before the project requirements were anywhere close to defined. Kevin was copying clients on timelines the team had never agreed to. Proposals were going out with delivery estimates that Sandra later described to Paul, very carefully, as aspirational.
Paul's narrative about the problem hardened gradually. His engineering team had gotten conservative. Risk-averse. Comfortable. They were approaching every new project like a liability instead of an opportunity, and their resistance was slowing down deals that should have been closing. He was increasingly convinced the problem was cultural, possibly personal, and that what he needed was either a difficult conversation or a change in personnel.
He called me, genuinely frustrated, wanting to know how to get his technical people to think more commercially.
I asked him to pull up his pipeline data before we talked about solutions.
## What the Data Actually Said
We spent an afternoon together going through eighteen months of deals, and I asked Paul to show me, specifically, where each one had actually stalled.
The pattern was the same every time. Deals weren't dying early in the cycle, when the prospect was still evaluating options. They were dying after the engineering team had already delivered a preliminary solution design. The average engineering investment in a dead deal was sixty-three hours. Weeks of technical work, already spent, and the deal was gone.
The most expensive example was still raw when we talked about it. Kevin had promised a client a fourteen-week implementation timeline. The actual timeline, based on the project scope, was twenty-two weeks. The client signed based on Kevin's number. When the real timeline came out during the project kickoff, they asked for their deposit back. Forty thousand dollars. Paul refunded it, because he felt he had no choice.
I showed Paul the pattern and then I asked him a question I already knew the answer to.
"What does your commission plan actually pay Kevin to do?"
He was quiet for a long moment.
Eight percent of deal value on close. Every week a proposal sat unsigned was a week Kevin wasn't earning. The plan had one message, clear as anything: move faster. Get signatures. Figure out the rest later.
And Sandra? Her compensation said nothing at all about whether deals closed. Her professional reputation was built on delivery accuracy and technical credibility. When Kevin's promises outran reality, she and her team were the ones who had to sit across a boardroom table and explain to a client why the timeline had changed. Paul had been blaming his engineers for a conflict that his own compensation design had engineered from the start.
## Why This Felt Like a People Problem
Paul's instinct, once he saw the data, was to call Kevin into his office and address it as a performance issue. I understood why. I'll be honest... earlier in my career I probably would have done the same thing. I would have coached Kevin on professional integrity and left the compensation design completely untouched.
But there's a management principle that's worth naming here, because it changes how you read the whole situation. Steven Kerr wrote about it in 1975 in a paper that remains one of the most cited pieces of management literature ever published. He called it the "folly of rewarding A, while hoping for B." Paul's plan rewarded individual close speed. Paul was hoping for patient, collaborative, technically rigorous solution design. When the plan and the hope point in different directions, the plan wins. Every time.
Kevin hadn't become a shortcuts guy. His incentives had. And Sandra had noticed before anyone else, because she was the one absorbing the consequences every single time.
What Paul was staring at wasn't a personnel problem. It was a design problem. And that distinction matters enormously... because the fix for a personnel problem is a conversation, and the fix for a design problem is a complete rethink of how the system is built.
That rethink is more complicated than it sounds. The instinctive solutions… eliminate commission entirely, put everyone on a shared bonus, change the ratio, each carry their own problems, and some of them are problems the research has already mapped out. Understanding why the obvious fixes don't work is what makes it possible to build something that does.
## Three Questions Worth Sitting With Before Part 2
Pull up your last twelve months of pipeline data and find out specifically where your deals are dying. If the answer is consistently after your technical team has already invested significant time, the commission plan is almost certainly the cause, and your engineers' attitude is almost certainly not.
Ask yourself what your technical team's compensation actually says to them about whether deals close. If the answer is nothing... that silence is a message they're receiving every single day.
And ask whether your sales rep earns the same commission on a well-scoped deal as on one that had to be revised after signing. If so, you're financially rewarding the behaviour that's quietly exhausting the people you can least afford to lose.
The plan is talking to your team every single day. In Part 2, we look at what thirty years of research on incentives, motivation, and compensation design says about why it's so hard to make it say the right thing — and why the most obvious fixes tend to make the problem worse.
The names and details here are changed, as they always are... but if any of this sounds like a conversation you've been putting off, it probably should.
The full framework, comp design, legal requirements for changing an existing plan in Ontario, and the change management process are covered in depth in Sales Comp That Doesn't Backfire - Field Guide. If you'd rather not wait for the series, it's all in there.
The content of this article is shared for educational and informational purposes based on professional experience and does not constitute formal legal or HR advice. Sales compensation structures involve employment law considerations that vary by individual circumstance. Before making material changes to any commission plan or employment agreement, you should have those changes reviewed individually with an employment lawyer or a qualified HR professional.
