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Glossary Terms
Compass - The Only Sales Glossary You Need
A compensation review is a critical process undertaken by organizations to ensure that their salary structures and benefits packages remain competitive, fair, and aligned with their strategic objectives. This process involves a thorough analysis of various factors including market trends, internal equity, employee performance, and organizational budget constraints.
A compensation review is a structured evaluation of an employee’s salary, incentives, and benefits to ensure fairness, competitiveness, and alignment with performance. For sales teams, it often includes base pay, commissions, bonuses, and performance-based incentives.
The purpose of a compensation review is to evaluate employee pay and benefits to ensure they are fair, competitive, and aligned with performance and market trends. It helps sales organizations reward top performers, address pay gaps, stay competitive in the market, manage budgets, and ensure compliance with labor laws. This process supports retention, motivation, and strategic compensation decisions.
Yes, especially in sales roles. Linking performance reviews to compensation ensures high performers are recognized and rewarded, which motivates continued results and supports a fair and transparent compensation review.
For sales leaders, a well-executed compensation review process directly impacts motivation, retention, and revenue performance. It ensures top performers are rewarded appropriately and helps prevent attrition by keeping pay competitive within the market.
Most companies conduct compensation reviews annually, but high-growth or sales-driven organizations may review quarterly or bi-annually. Timing should align with performance review cycles and business planning to ensure budget alignment and timely adjustments.
The compensation review process typically starts with performance assessments, market benchmarking, and budget analysis. For sales teams, this involves reviewing quotas, commission structures, and individual performance. Tools like compensation management software help automate and streamline this process for accuracy and scalability.
Sales professionals can request a compensation review by presenting a clear case backed by performance data, quota attainment, and recent wins. It's best to time the request during annual reviews or after consistent overperformance.
Gather your sales metrics—quota achievement, closed deals, pipeline growth, and any recognitions. Benchmark your role against market standards and be ready to show how your contributions have driven revenue. Preparation makes the compensation review process more data-driven and effective.
