Paying Sales Managers: Overrides, MBOs, or Both

An override that pays a manager a modest share of their team's closed revenue keeps their pay linked to team performance without paying them as if they were an individual contributor on every deal. Set the percentage too low and it becomes background noise a manager barely notices. Set it too high and managers start swooping into individual deals to close them personally, rather than coaching reps to close their own, which undermines the point of having a manager at all.

Say two managers run similarly sized teams, but one has an override large enough to visibly move their take-home pay and the other's is small enough to round to nothing: the first manager is far more likely to spend their week in deal reviews and forecast calls, while the second treats team performance as someone else's problem.

Team quota attainment says nothing about whether a manager is actually developing their reps, keeping forecast accuracy tight, or managing attrition on the team. MBOs tied to specific, checkable goals, like a target ramp time for new hires, forecast accuracy within a defined margin, or a retention target for the team, fill that gap directly.

The tradeoff is that MBOs are more subjective to evaluate than a quota number, so they need a clear scoring rubric agreed on before the period starts, not a retroactive judgment call made once results are already in. A rubric drafted after the fact almost always looks like it was reverse-engineered to justify whatever score someone already had in mind.

A manager whose override depends heavily on one or two reps' performance is effectively exposed to individual variance they can influence but not control. If your team size is small enough that one rep's bad quarter swings the manager's override materially, either widen the override calculation to a rolling average across a longer period, or shift more of the manager's pay toward the MBO side, where the goals are things they more directly own.

• Team override: ties manager pay to collective results; keep the percentage modest so it doesn't pull managers into closing deals themselves.
• MBOs: cover goals a quota number misses, like ramp time or retention, but need a scoring rubric set in advance.
• Blended plan: most manager comp plans use both, typically weighted more toward the override once a manager has been in seat for a full cycle.

A manager who inherits several brand-new hires has a very different job for the next two quarters than one whose team is fully ramped and stable, and the comp plan should reflect that difference rather than treating every manager identically regardless of team makeup. Leaning the blend more heavily toward MBOs like ramp time and coaching quality during a heavy-hiring stretch, then shifting back toward the override once the team stabilizes, keeps the manager's incentives pointed at what actually matters that quarter.

Verbal agreements about what counts toward an MBO tend to drift in a manager's memory toward whatever made the score look best in hindsight. A short written document, agreed on with the manager's own leader before the period begins, listing each MBO, how it's measured, and what weight it carries against the override, removes most of the ambiguity that turns a comp conversation into a negotiation every single quarter. It also gives a newly promoted manager a clear map of exactly what their first few months are actually being measured against, rather than a vague sense that coaching "matters somehow."

A single leader scoring several managers' MBOs independently, without comparing notes across the group, risks applying the same rubric inconsistently from one manager to the next simply through natural variation in how strict or lenient a review feels on a given day. A short calibration step, reviewing the group's scores together before they're finalized, catches that drift and keeps the rubric meaning the same thing for every manager it's applied to.