Should commissions be tied to individual or team goals? This is a question that often comes up in discussions about compensation in companies, especially ones with complex or large sales team structures. When considering this issue, look at individual motivation, team collaboration, potential conflicts and the link between individual achievements, and team success.
Individual vs. team collaboration: which produces better results?
When I think about individual motivation, I immediately think of the story of a salesperson who had a clearly defined individual goal: to sell a certain number of products in a month. Let’s call him Adam.
Adam was a master of his craft – he knew all the sales techniques, was able to listen to customers, and was excellent at responding to their needs. Adam not only met his goals but often exceeded them, which resulted in high commissions for individual results. However, from the perspective of the team as a whole, the situation looked completely different. Adam’s coworkers felt that their successes were less important because the company primarily rewarded individual results – mainly Adam. This resulted in a lack of team spirit and a tense atmosphere in the office.
By contrast, let’s take a look at a team where commissions were tied to team goals – because there is a different dynamic to be observed here. Anna was the leader of a marketing department where team commissions were in effect, meaning that the success of the entire group resulted in bonuses for everyone. Anna was known for inspiring her coworkers and supporting them in their tasks. When one team member had a problem with a project, the others were eager to help because they knew that the shared success was theirs too. The result was a well-coordinated, effective team that consistently achieved high results.
So which model is better? Contrary to appearances, it depends – both approaches have their applications.
Individual motivation is based on the assumption that clearly defined individual goals can lead to exceptional results. When a person knows that their compensation is directly linked to their work results, they often increase their commitment and effectiveness. This type of compensation structure seems to be particularly effective in situations where success depends mainly on individual actions – for example, in sales.
In turn, a system based on team cooperation promotes mutual support and building relationships between group members. If the commission is tied to joint results, people in the team have a stronger motivation to cooperate and share knowledge. This approach works well in environments that require intensive coordination and joint action – for example, in creative teams.
Potential conflicts in teams resulting from differences in goals
Each compensation model also has its drawbacks and carries the risk of conflict:
- Individual system – the main problem here is competition. Employees focusing only on their own results can damage cooperation, lead to the isolation of some people in the team, and create tensions. People focused on individual success may be reluctant to share information or support others, fearing that it will harm their personal achievements Team system – although it promotes cooperation, linking the bonuses to the results of the entire team can also cause frustration in people with above-average ambition and commitment. Seeing the lack of effort on the part of other employees, such people may feel that their work is not properly appreciated. So-called “free riders”, i.e. people who take advantage of the efforts of others without making an appropriate contribution, can negatively affect team morale.
So how can we avoid such situations? Transparency in establishing rules that govern bonuses and regular communication about expectations and results seems to be key. It’s also important for managers to actively manage potential conflicts, clearly defining the roles and tasks of each team member.
How to combine individual achievements with team success?
Is there a golden middle? Actually, yes – it seems that the best option is a hybrid model that combines individual and team commissions.
Referring to the example given earlier, let’s imagine a situation, in which Adam and his team work together on a large project. Adam receives a commission for his individual results but, at the same time, has an additional bonus depending on the success of the entire team. In such a model, Adam is motivated to achieve his goals, but he’s also willing to share knowledge and help others.
A hybrid model can effectively motivate both achieving one’s own goals and supporting others. With this approach, employees can have clearly defined individual goals, but at the same time, they feel responsible for the team’s success. However, the criteria for dividing commissions must be clear and understandable to everyone. Well-designed software plays an invaluable role in ensuring appropriate transparency (more on this in a moment).
Additional support can be provided by training in the field of cooperation and conflict management. In turn, investing in the development of soft skills of employees and leaders can significantly improve the atmosphere in the team and work efficiency.
MonkeyJar – Your way to transparency and a fair commission model
The best way to ensure the appropriate transparency of the commission model in the company (and therefore, to guarantee fair rules for awarding bonuses and healthy competition in the team) is to invest in software such as MonkeyJar. The commission calculation system will automate the processes related to them and allow you to organize the rules that govern them.
MonkeyJar is based on the Oracle APEX low-code platform, Oracle Cloud infrastructure, PL/SQL and JavaScript. Our solution is easy to use, very scalable and characterized by high efficiency and configurability. The system implements data from various external sources, verifies information, and uses it to automate the calculation of sales commissions. MonkeyJar was designed for continuous control of the commission process – it ensures excellent data quality, transparency and full auditability. It also allows you to use advanced reporting options and advanced security functions (e.g. a configurable authorization system).
Here is the full set of features and advantages of our system:
- Cloud – MonkeyJar doesn’t require installation. The tool is a web application that can be used in a browser.
- Settlement model – Automated, flexible commission settlement based on fully configurable models and transparent rules. MonkeyJar allows you to take into account various sales parameters and various commission periods (daily, weekly, monthly, quarterly, half-yearly and annual).
- Sales structure – A module enabling graphical and tabular configuration of the sales structure.
- Dealer portal – A separate platform for sales representatives (e.g. consultants or agents), which is also available on mobile devices. It offers access to a summary of paid commissions, bonuses and sales history. The module also allows you to submit complaints.
- Data import – Instant data import from Google Sheets and Microsoft Excel spreadsheets.
- Recovery – Automatic calculation of clawbacks in the event of changes or cancellation of a purchase.
- Reports – Analytical module allowing for collective control of commission, sales or commission data in selected periods.
- Roles and permissions – Ability to easily create roles for users (e.g. billing specialist or administrator) and assign them permissions to view specific system elements and edit individual data types.
- Security – Secure, universal login mechanism using Google or Microsoft accounts.
- Integrations – MonkeyJar offers API (REST) enabling data transfer from the platform to external systems.
- Interface – Clear and intuitive interface providing high-class user experience.
- Configuration – Universal and fully editable glossary of terms, enabling the use of various data sources to support various sales channels.
- Implementation – At the first meeting, we present the client with a system based on a scenario adapted to their industry (the price of the system includes full implementation service with training for all employees who will use the new solution).
- Multilingualism – MonkeyJar is available in English and Polish (it will also support other languages soon).
Conclusion
Should commissions be based on individual or team goals? There is no single answer to this question – it depends primarily on the specifics of the team, the company’s goals, and the type of work. Individual motivation can lead to outstanding results, but it risks destroying team spirit. Team commissions, on the other hand, promote cooperation but can be perceived as unfair if everyone is not equally committed. The optimal solution seems to be a hybrid model that combines the best of both approaches.
The key is to understand the needs of the team and adapt the commission model accordingly. Regardless of the chosen approach, it is also extremely important to establish specific and transparent rules. If you want to organize commissions in your business, we encourage you to check out our MonkeyJar tool, which is suitable for managing commissions in all forms – both those based on individual goals, team goals, and combining elements of both approaches. Schedule a meeting now – we will show you how our platform will help your company!
