Description of the 3P's of compensation

The Uncomfortable Truth: Sales Compensation Is Mostly About Performance

(But We Pretend Otherwise)

If sales compensation were purely rational, we’d do this:

• No base salary
• No experience premiums
• No tenure adjustments
• Just pay for revenue produced

But almost no serious sales org does that—because sales is a high-variance, high-cost system, not a factory line.

The real job of Position and Person in sales comp isn’t to reward them.
It’s to price risk.

That’s the missing lens in most 3 P’s discussions.

Reframing the 3 P’s for Sales: Revenue, Risk, and Optionality

Traditional framing (too soft)

• Position = role value
• Person = individual traits
• Performance = results

A sharper sales-comp framing

• Position = Revenue Ceiling
• Person = Risk Adjustment
• Performance = Revenue Realized

Once you look at it this way, the contradictions start to make sense.

1. Position: Not “Role Value,” but Revenue Ceiling

You nailed this part already.

A role doesn’t just describe responsibilities—it defines the maximum plausible revenue output.

Position in sales really determines:

• Account universe size
• Deal size distribution
• Sales cycle length
• Margin and complexity
• Strategic blast radius of mistakes

That’s why:

• A mid-market AE cannot be expected to perform like an enterprise AE
• Even a “10x rep” is constrained by role design

Controversial take:
Position-based pay isn’t about fairness—it’s about preventing fantasy forecasting.

If your comp plan assumes mid-market reps can close enterprise-scale revenue, the plan is lying.

2. Person: Experience Is Not About Reward—It’s About Risk Insurance

Here’s the part most companies won’t say out loud:

We don’t pay experienced reps more because they deserve it.
We pay them more because mistakes are expensive.

Why Person exists in sales comp at all

For roles like Account Executive:

• Ramp time is long
• Customer mistakes are sticky
• Lost trust is hard to recover
• One bad deal can poison an account for years

So experience and tenure are really proxies for:

• Lower probability of catastrophic error
• Faster path to “safe productivity”
• Better judgment in edge cases
• Fewer RevOps fire drills

This is not upside logic. It’s downside protection.

The uncomfortable implication

If a highly experienced AE:

• Misses quota consistently
• Doesn’t generate pipeline
• Fails to close

Then Person-based premiums should evaporate.

Many orgs fail here because:

• They lock experience into base salary permanently
• They treat tenure as entitlement instead of risk mitigation

3. Performance: The Only P That Should Scale Without Limit

Here’s where sales comp should be ruthless.

Performance is the only P that:

• Reflects actual value delivered
• Should compound
• Should dominate total earnings at scale

A strong stance

If Performance doesn’t dwarf Position + Person at high attainment:

• Your plan rewards credentials over outcomes
• Your top reps are subsidizing your average ones
• You’re signaling that results are optional

Innovative idea:
Cap Person, not Performance.

• Person adjustments fade after ramp
• Experience premiums decay if results don’t materialize
• Performance accelerators never cap (or cap very high)

A Radical-but-Practical Model: The “Fading Person” Framework

This is where you really push the envelope.

How it works

1. Person matters most early
2. Higher base during ramp
3. Quota relief
4. More guaranteed earnings
5. Person fades over time
6. After X months, comp converges
7. Two reps in the same role face the same economics
8. Results dominate pay variance
9. Performance fully takes over
10. Accelerators reward sustained output
11. No permanent premium for “used to be good”

This mirrors reality:

• Experience reduces early risk
• Performance proves long-term value

Why This Is Controversial (and Why It Works)

Why companies resist it

• It’s uncomfortable to tell senior reps they’re not entitled to upside
• Managers fear attrition
• Legacy comp structures calcify quickly

Why top sales orgs quietly do it anyway

• They protect downside early
• They let upside be ruthless
• They keep credibility with high performers

The Real Question the 3 P’s Should Answer in Sales

Forget theory. A sales comp plan should clearly answer:

1. What’s the revenue potential of my role? (Position)
2. How much risk does the company take on with me? (Person)
3. What happens if I actually deliver? (Performance)

If reps can’t answer those three questions, the plan isn’t strategic—it’s decorative.

Why This Matters for SalesCompLab

This is where SalesCompLab has a natural POV advantage.

Most tools:

• Obscure the tradeoffs
• Hide assumptions
• Treat comp as math

SalesCompLab can:

• Make risk visible
• Show how much pay is guaranteed vs earned
• Break down why someone was paid—not just how much

That’s not just transparency—it’s economic literacy for sales reps.

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