As Incentive Compensation Extends Beyond Sales, New Research Exposes Lack of Preparedness and the High Cost of Manual Processes
SAN FRANCISCO, May 6, 2025 -- CaptivateIQ, a leading sales performance management solution, today published its annual State of Incentive Compensation Management Report. The report, based on a survey of more than 200 U.S.-based B2B incentive compensation leaders, explores how incentives are being used to drive organizational growth, and the findings uncover key areas for improvement in today's challenging macroeconomic environment.
While 59% of companies rely on incentive compensation to fuel growth in 2025, outdated processes are holding many of these programs back from driving the growth they seek. Manual workflows create costly errors, inefficiencies, and make it hard to scale – impacting program return on investment. Moreover, nearly half (49%) of companies have overpaid or underpaid commissions in the past year alone.
Despite recognizing the value of automation for accuracy, efficiency, and productivity, just 39% of organizations have adopted it as part of a cost-reduction strategy in the past year. Many struggle to demonstrate the return on investment of incentive compensation, making it difficult to secure executive buy-in for necessary improvements. As a result, fewer than one-third (30%) feel very prepared to navigate economic shifts and market volatility with their current incentive strategies.
Even with these challenges, the research highlights several ways organizations can benefit from a more strategic, modern approach to incentive compensation, ultimately helping teams stay motivated, aligned, and better equipped to reach their business goals. These include:
Using Incentives to Fuel Scalable Growth
Especially in uncertain times, incentive compensation remains one of the most effective tools for aligning performance with business priorities. In fact, the most forward-thinking teams are expanding incentive programs beyond sales, reviewing performance more frequently, adapting plans in real time, and tying rewards to company-wide priorities. The research found that:
- 72% of organizations plan to expand incentive compensation programs to new departments, such as marketing, finance and HR.
- Reviewing and adjusting plans more frequently correlates with higher revenue performance: companies reviewing performance weekly versus annually reported almost 2x significant growth.
- 53% are making it a priority to increase seller motivation this year.
Bridging the Trust Gap with Increased Visibility
Incentive compensation programs are most effective when they are easy to understand, but many organizations still struggle with issues around data accuracy, visibility, and communication. As teams look to improve trust, transparency, and revenue results, AI and real-time insights are becoming essential tools for reducing confusion and surfacing what matters most:
- More than one-third (35%) say that a lack of transparency for sellers about how incentive compensation is calculated is a top challenge for their teams.
- Only 52% of organizations provide sellers with real-time visibility into current and potential earnings.
- Of those using AI, more than half (55%) say it has improved real-time visibility for sellers.
"Too often, compensation is treated as a cost center rather than a strategic growth lever," said Mark Schopmeyer, Co-CEO and Co-Founder of CaptivateIQ. "Manual processes not only drain time and resources, they also introduce errors that erode trust and performance. With only 27% of companies fully automating their compensation programs, there's a huge opportunity for organizations to modernize and unlock the full potential of incentives to motivate teams, increase transparency, and drive efficient growth."
To read the full report and learn more about how forward-looking organizations are approaching incentive compensation, including best practices for scaling beyond sales teams and increasing visibility through automation and AI, visit: https://stateoficmreport.captivateiq.com.
About CaptivateIQ
CaptivateIQ is the leading Sales Performance Management solution, trusted by customers including Affirm, Boston Scientific, and Netflix. With solutions for Sales Planning and Incentives, they help revenue teams automate processes, hit revenue targets, and adapt with business change, ultimately driving efficient growth. It's time to rethink ROI - your return on incentives - with CaptivateIQ. For more information, visit www.captivateiq.com.
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