Experts in ICM: Rachel Parrinello on What Top Performing Comp Teams Get Right

In our Experts in ICM Series Q&A series, we’re sitting down with leaders from across the incentive compensation and sales performance management space to explore learnings, trends, and opportunities that exist for today’s ICM and SPM professionals.

We recently sat down with Rachel Parrinello – principal and sales compensation thought leader at the Alexander Group – to learn what today’s best comp teams are doing differently, and why now is the time to rethink how you’re managing plans, quotas, and costs.

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You've worked with hundreds of organizations across industries. What do you see separating top-performing comp teams from the rest?

One big thing: they align their comp programs with their actual business strategy — and they can explain how.

That may sound simple, but it’s surprisingly rare.

Sales compensation is one of the most powerful levers CROs (Chief Revenue Officers) have. When it’s disconnected from how the company’s growth strategy — whether that’s through new business, expansion, specific territories, or products — you’re flying blind.

The best teams really understand the jobs they’re incentivizing. They know 1) which behaviors matter, 2) what sales motions support them, and 3) how those roles evolve across customer segments. That insight lets them push back when someone says, “Let’s just add a new measure.” They can turn around and ask, “What behavior are we really trying to drive?” and offer better options — like a credit uplift, gated accelerator, or a multiplier tied to a specific product line. That strategic lens is what sets the best performing teams apart.

We’re somehow almost halfway through 2025 – what trends are shaping comp plan design this year, and where do you see teams struggling the most?

We’re seeing a growing focus on plan efficiency and simplification. After years of layering on SPIFs, bonuses, and exceptions, many companies are dealing with “Frankenstein plans” — overcomplicated structures that can confuse reps and dilute impact – and are now trying to course-correct.

We’re also seeing more teams recognize that compensation design doesn’t happen in a vacuum — it needs input from finance, sales, HR, and operations to succeed – and at the same time, there’s increased interest in scaling compensation administration without adding headcount. That’s leading to wider adoption of tools, automation, and AI — especially in areas like quota modeling, plan modeling, and rep communication.

We just finished our latest survey, and for the first time ever, “managing uncontrollable external factors” topped the list of compensation challenges. That’s a major shift — historically, quotas were the number one pain point. They still are for many, but this new concern reflects the broader volatility we’re all dealing with.

Beyond that, costs are climbing. Salary increases are higher than usual — nearly 4% this year — and headcount needs are rising as companies chase growth, all of which is putting pressure on compensation budgets. And another real issue is productivity – about 70% of companies expect their sales comp cost of sales to increase this year, but many aren’t doing enough to optimize for performance or ROI.

Where are companies missing the mark when it comes to pay-for-performance strategies?

It often starts with a lack of alignment at the top. Before you design anything, you need to agree on the pay-for-performance philosophy, including how much upside to offer top performers, how Darwinian you want to be, and whether to use individual or team goals. Without that, you end up with design-by-committee — with some leaders pushing for high accelerators, others worried about cost or fairness — and you get friction. Or worse, you end up with a plan that doesn’t actually reflect your philosophy.

Another red flag is when performance and pay don’t match. That usually points to one of three issues: 1) ineffective quotas, 2) plan leakage from too many add-ons, or 3) misaligned incentives. For example, in tech, we’ve seen plans with multiple overlapping bonuses — new pricing, multi-year deals, professional services targets — on top of base commissions. If you look up and realize 40% of sellers hit quota, but 60% hit their full incentive, that’s a problem.

Let’s switch gears to talk about tools and efficiency. You mentioned AI is gaining traction in comp. Where are companies using it most effectively?

Adoption has more than doubled in the past year — up from 20% to over 40%, and it’s showing up across the sales comp lifecycle. The top three use cases we’re seeing are:

1. Analytics and reporting – Think plan modeling, attainment trends, or cost impact analysis.
2. Plan and quota design – Using machine learning to spot outliers or test changes.
3. Sales rep support – AI copilots that help reps understand their plans, forecast earnings, or ask “What do I earn if I close this deal?”
   

We’re also seeing companies build query libraries so their reps can get answers faster, but it’s important to note that this only works if the underlying data is clean and current. If your AI is pulling from outdated policies, it creates confusion instead of clarity.

You mentioned that quotas remain a perennial challenge. What’s going wrong — and how can teams improve?

We see two major issues. The first is over-allocation, where total rep quotas exceed the company’s actual revenue target. This creates a hidden penalty and tanks morale.

The second is poor quota transparency. If sellers don’t understand how their number was set — or believe it’s unachievable — they disengage.

Top-performing companies treat quota-setting as a cross-functional discipline. They align quotas to the sales crediting logic and adapt their methodology to the role — using strategic planning for enterprise reps and data models for transactional teams. They also train managers to have real conversations with reps about how to hit their number.

For sales comp or RevOps pros who want to elevate their team’s impact this year, where would you recommend they start?

Start with strategic clarity.

[BLOCKQUOTE
| Quote: Ask yourself: “Do we understand how the business makes money? Can we connect our comp plans to that strategy?” If not, that’s the work.
| Author: Rachel Parrinello
| Title: Principal, Sales Compensation, The Alexander Group
]

From there, tighten up your design process. Align on job definitions, lock in your pay philosophy, and then move into design. Skipping those steps only leads to rework and frustration.

And finally, watch for plan bloat. Avoid the temptation to tack on bonuses and tweaks. Instead, keep things simple, focused, and aligned. That’s what the top teams are doing — and it’s what drives real performance.

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If you’re interested in participating in one of the Multiplier Q&A features or have questions about AI’s impact on sales performance and incentive compensation, reach out to us at multiplier@captivateiq.com.