Unlock Savings With These 5 Smart Incentive Strategies

Incentive compensation is one of the most powerful levers a company has to drive performance. When structured correctly, incentive compensation doesn’t just motivate employees. It controls costs, reduces errors, and improves transparency. 

As businesses push to make every dollar work harder, smarter incentive strategies are helping unlock more value from the same (or smaller) compensation budgets. In fact, 59% of companies are leaning on their incentive compensation programs to help drive growth this year, and 56% are using incentive compensation programs to increase seller productivity.

Here are five ways companies are revamping their incentive strategies to spend smarter and achieve more. 

1. Eliminate Overpaying or Underpaying

Errors in commission payouts aren’t just frustrating—they’re expensive, time-consuming, and deeply damaging to trust. Overpayments eat into your budget, while underpayments frustrate and demotivate your team. 

Yet, these issues are surprisingly common: 66% of companies have experienced inaccurate commission payouts, and nearly half (48%) have dealt with both overpayments and underpayments. JP Morgan, for example, once lost $6 billion due to a copy-paste spreadsheet error.

The root cause is usually manual processes and poor data hygiene. Compensation plans often rely on spreadsheets and disconnected systems, leading to human error, version control issues, and limited visibility for stakeholders.

To reduce errors, savvy teams are: 

• Ensuring data quality at the source, since even the best-designed compensation models fail if the input data is flawed.
• Removing manual calculations by investing in automation tools that streamline calculations and ensure accuracy across the board.
• Looping in sellers by providing timely, transparent access to comp data — from attainment to payout details. When reps can track and understand their earnings in real time, they’re less likely to raise disputes and more likely to stay motivated.
  

By prioritizing accuracy and automation, companies can eliminate costly mistakes, cement trust with incentivized employees, and count on more predictable, controllable compensation spend.

2. Automate Administrative Tasks to Save Hours (and Hours)

Many compensation teams spend a shocking amount of time each month — a whopping 89 hours, on average — managing commissions manually. That includes chasing down data, reconciling errors, formatting reports, and updating spreadsheets, among other tasks.

This kind of busywork not only slows down payouts, it also limits a team’s ability to think strategically. The more time spent on administrative work, the less time available to analyze performance, improve incentive models, or adapt to market changes.

Top teams are solving this by: 

• Replacing spreadsheets with automated workflows that handle everything from data ingestion to payout execution.
• Streamlining reporting to better understand incentive performance without the otherwise-required heavy lift.
• Centralizing compensation management with a single source of truth that manages all comp-related tasks, avoiding the need to jump between tools or track down data.

In fact, 39% of companies have increased their use of automation to reduce costs this year. Ultimately, automation isn’t just about saving time — it’s about unlocking capacity to focus on work that truly drives performance.

3. Align Incentives to Business Growth For Better ROI

Incentive compensation shouldn’t just reward activity. It should reward impact. The most successful companies don’t just “set it and forget it” when it comes to incentive plans. Instead, they regularly revisit and refine their programs to ensure alignment with evolving business objectives.

CaptivateIQ research reveals that companies reviewing performance weekly are twice as likely to experience significant growth compared to those reviewing annually. Even more compelling: businesses that adjust compensation programs weekly are three times more likely to achieve meaningful growth.

Ways to increase ROI from incentives:

• Tie incentives to outcomes that matter most, such as profitability, customer retention, or new product adoption.
• Limit the number of metrics in your compensation plan. Typically, sellers perform best when focused on two to three key outcomes.
  

What sets top performers apart isn’t just how often they check the numbers – it’s how quickly they act on them.

Agile teams treat incentive optimization as an ongoing process, not a once-a-year exercise. That responsiveness allows them to stay aligned with strategy, adapt to changing seller behavior, and unlock better results, faster. 

4. Expand Pay-for-Performance Beyond Sales Teams 

Many companies are finding success by extending variable pay to other functions in addition to sales. Roles like customer success, marketing, and support increasingly influence revenue and customer outcomes, so why not motivate them with performance-based pay, as well?

In fact, 72% of companies expect to expand incentives to new departments in the next few years. And with 81% of employees preferring some form of performance-based compensation, it’s a powerful way to drive accountability and alignment across the business.

Best practices for expanding incentive programs:

• Customize metrics for each team. For support teams, that might mean measuring customer satisfaction scores or average resolution times, while for demand generation marketing, relevant metrics might include lead conversion or campaign performance.
• Incorporate Management by Objectives (MBOs) for roles where revenue impact is indirect.
• Balance fixed and variable pay to ensure incentives are meaningful but sustainable.
  

Done right, company-wide incentive strategies build a culture of performance, improve cross-functional collaboration, and help everyone feel invested in business outcomes.

5. Consolidate Underperforming Software

As businesses grow, their tech stacks tend to grow with them—sometimes more than necessary. Over time, companies accumulate a patchwork of tools and services that overlap, underdeliver, or no longer fit evolving needs.

This bloat comes at a cost: expensive licensing fees, integration headaches, and support contracts that offer little ROI. Leading organizations are now auditing their compensation tech to find opportunities for consolidation and cost savings.

What to look for:

• Tools with overlapping functionality. Could a single platform replace multiple point solutions?
• Vendors charging for services that could be automated or brought in-house with the right technology.
• Software that fails to scale as compensation models grow more complex.
  

Companies that switch to all-in-one platforms report average savings of in the tens of thousands of dollars — not just in software costs, but also in the reduced need for manual labor, consulting, and error resolution.

Smart tech consolidation of course saves money, but as an added bonus, it also creates a more efficient, flexible, and resilient incentive management infrastructure.

When It Comes to Sales Compensation, Every Dollar Counts

Incentive compensation has always been about driving performance, but in today’s cost-conscious business climate, it also needs to drive efficiency and productivity. By ticking these boxes, you can transform your compensation program into a lean, powerful engine for growth, making every incentive dollar work harder, deliver more impact, and position your business for long-term success.

Make Your Incentive Program Work Harder – and Cost Less 

You don’t need to overspend to drive performance. By tightening up operations and strategically aligning incentives to what matters most for your business’ needs, you can turn compensation into a dedicated engine that delivers both efficiency and impact.