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How to Adjust Your Sales Comp Plans for Expecting Parents

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Your organization’s sales comp plan may be hurting those who take parental leave and are on both a base and variable salary. Help them stay ahead with the following advice from Ryan Milligan, QuotaPath’s Senior Director of RevOps.

All companies want to be seen as being supportive and fair and that includes being helpful when parental leave comes into the conversation. Unfortunately, when a commissioned employee is ramping up for coming back to the office, their employer’s comp plan may be winding down on them and potentially causing unexpected financial stress. 

When the new parent returns to work, what awaits them? Is it a helpful team and a pipeline similar to the one they left behind for others? Or can they expect the stress of feeling like a new team member even though they’ve likely already proven themself several times over.

It’s time to look at how leave policies can be adjusted to ensure SaaS sales team members are being supported upon their return and set up for success. 

New parents who work in tech can now plan for an average of 12 to 16 weeks off fully paid, and 18 to 24 weeks at larger organizations. Under U.S. standards, those are pretty generous leave policies. (Internationally, not so much, however that’s a post for another time.)

But for sales reps, parental leave policies often only cover their base salary and fail to factor in the variable pay potential they miss out on while absent. 

Even more, reps returning from leave come back to empty pipelines. I’ve seen firsthand a number of top performers who have essentially had to start from scratch like they’re a new hire. 

“At most companies, when a sales rep returns from parental leave they have a normal quota instead of a ramp quota. So they return to work with limited to no pipeline, yet are paid and evaluated against a fully productive AE quota,” wrote Co-Founder and CEO at Parentaly Allison Whalen in her blog

This puts new parents in sales roles in precarious positions as they consider the future of their careers. Especially expecting mothers, who are more likely to take on the primary caretaker role, the full leave, and who are historically paid less than their male counterparts. 

So, how can we ensure that our reps on leave have a legitimate shot at reaching their total on-target earnings (OTE) after missing an entire quarter? What can we put in place so they have a smooth transition back and are set up for success upon their return? 

If you want somebody to remain in your organization and feel valued by their employer, you have to put policies in place that actually show this.

Below, I’ve outlined best practices for adjusting your sales comp plans for parental leave and common mistakes to avoid. 

Best practices 

  1. Look at how the person is compensated today

At QuotaPath, we recently went through this. We looked at how our sales team, leaders included, earn variable pay today. What are the drivers of their sales compensation? What percentage of their OTE is base salary versus variable pay

Another great question to ask is how much of their incentive compensation are they driving explicitly by themselves? Meaning, an individual rep has much more ownership over their results versus a RevOps leader like myself whose goal is tied to total ARR change in the business. Leave compensation should reflect that. 

  1. Plan for what happens while they are on leave

Next, look into what you expect to happen while that person is on leave, which will vary by role. For example, the individual contributors will likely have deals trickle in while away. Who will drive those to the finish line? What about incoming leads that automatically round robin to the rep?

You should consider ramping return plans to help them out while they rebuild their pipeline and recruit help from sales leaders to run point on their deals. That avoids splitting commissions with other reps and allows your rep who is out to earn full commission. 

  1. Set your bound within the compensation

When you set this up, will your organization fall on the lowest bound, in the middle, or on the highest side?

The lowest bound, and the most conservative, would involve paying your rep no variable pay while on leave. It’s not a very human approach, but you’d be surprised how many companies follow this route.

Reversely, paying them the full OTE while absent falls on the highest bound.

We typically try to meet somewhere in the middle depending on the person’s tenure within the organization. A middle-bound plan might involve offering 60% OTE each month the person is out. Another might be to pay a full month of OTE and the full base for the remainder of the leave.

Just make sure the math makes sense. 

  1. Prepare for their return

Warm up their pipeline for your reps while they’re out. Close their deals and continue to feed and move prospects through the funnel. 

Set up ramp-up plans so that they have a fair shot at achieving OTE by years’ end.

5. Communicate your comp plan leave policies

This will ensure consistency and understanding across your sales organization and sets the precedent for future reps who go on leave. Explain the “whys” behind the policy and show the math.

If a seller goes on leave for three months, it’s unlikely that they’ll expect variable pay for an entire quarter’s time. It’s not financially viable. However, paying them nothing is punitive. Find the middle ground and treat people in a human nature.

Avoid these mistakes

The biggest mistakes I’ve seen when it comes to leave policies for sales teams are basically the opposite of the best practices mentioned above. They include:

  • Failing to prepare the person for their return
  • Taking a firm line on no variable comp while on leave
  • Creating different leave policies for fathers vs. mothers
  • Not supporting comp leave if parents use the time off in chunks (vs. all at once)
  • Tailored compensation and leave policies on an ad hoc basis

Final thoughts

The biggest thing to think about when it comes to these is ensuring that your team member is set up for success upon returning. The comp plan is important, but the path for their return is even more. 

Be consistent. Be transparent. And, be human in your approaches. Include your team as you’re building these out and ask for feedback every step of the way.

About QuotaPath

QuotaPath provides sales compensation and commission tracking solutions for scaling GTM organizations. Pairing an easy-to-use user experience with a highly technical backend, QuotaPath is the only solution fit to get Sales, RevOps, and Finance all on the same page. 

To learn more about QuotaPath and parental leave compensation policies, meet with their team here

About the author: 

Ryan Milligan serves as QuotaPath’s Sr. Director of RevOps and resident crossword puzzle builder. He has worked as a data scientist, marketing manager, and revenue operations leader across his 10+ year career in e-commerce and SaaS. He and his wife also share an incredible dog named Ruby together.

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