Stop using “uncapped commission” in your sales job descriptions
There are a lot of red flags you should be aware of when looking for sales job postings. When I see a job description that says someone needs to be “competitive,” I assume that means the sales team doesn’t collaborate. Job postings that say “sales ninja” make me roll my eyes. The worst of them all is “uncapped commission.”
What is uncapped commission?
Uncapped commission means that there is no limit to the amount of commission you can earn on the deals you sell. You may have also heard it referred to as unlimited commission. If you hit 200% of your quota, you’re going to earn more than if you sold 100% of quota. Likewise, if you hit 300% of your quota, you’re going to earn more than if you sold 200% of quota.
Why “uncapped commission” should scare you
Wait a minute, shouldn’t I be happy that the sales organization isn’t capping my commissions? Absolutely! A sales leader who caps commissions is (generally) not one you want to work for. Simply put, if a company lists “uncapped commission” in the job description they don’t have a good understanding of how to pay salespeople. Keep commissions uncapped. Listing this as a perk is like listing “desk and phone” under perks.
What it usually translates to
You’re going to be underpaid. A company should be able to tell you what percent of their sales team hits quota every month. They should be able to tell you how much their average salesperson is making per month in commission. Not just the top seller, the average seller.
It also means that the company thinks salespeople only lean on money for motivation. While it’s true that most sales reps find their motivation from money, a number of other factors can inspire them to work harder.
Alternatives to “uncapped commission”
Clearly state the on-target earnings (OTE) in the job description! If you don’t know your on-target earnings, you can use QuotaPath’s Sales Compensation Calculator. Because OTE is base salary plus commission, this number can be misleading as well though. Ensure you declare what the base salary is and what the on-target commissions are. Sales organizations should have a clear promotion track and a fair and balanced compensation structure that applies to everyone. If everyone on your sales team has a different salary/OTE, you’re likely underpaying people of color and women. Don’t feel comfortable laying out the exact OTE? Simply stating that the role is a base + commission is sufficient.
If you need a hand calculating your team’s commissions, QuotaPath is a powerful, simple commission tracking software.