In the last entry I addressed how much stretch to build into goals. In this one I take a look at another key element of incentive design, how large should the incentive earning opportunity actually be? Incentive opportunity is also referred to as leverage (because it is normally calculated as a percentage of base salary or salary range midpoint), or dollars at risk (because incentive dollars are not guaranteed. Whichever term you use to refer to it, the table below gives you a rough idea of what would be considered typical leverage for a variety of positions:
(1) Sales positions at this level may have a Target greater than that shown depending on the nature of the sale. Some sales and sales management positions may even have targets as great as 100% of base salary. Click here for more information on setting sales targets.
Check out Incentive Plan Builder for more information on payout targets.