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MBO (Management By Objectives)
A bonus tied to specific, measurable strategic goals - separate from revenue commissions.
Bonus Layers
Intermediate
How it works
Management by Objectives bonuses pay against discrete, measurable goals (e.g., complete 10 customer business reviews, achieve 95+ NPS, ship a new product playbook). Used to reward strategic priorities that don't show up directly in revenue. Best paired with quarterly or annual cadence rather than monthly.
Formula
MBO_bonus = base_bonus x MBO_completion_score (0-100%)
Worked example
Example. A CSM earns a $5K quarterly MBO bonus tied to 4 objectives: completing 10 QBRs (25%), 95+ NPS (25%), 90% CSM playbook compliance (25%), one logo case study (25%). Achieving all four pays $5K; achieving 3/4 pays $3.75K.
Pros & cons
Pros
- Aligns rep behavior with strategic goals not captured by revenue
- Useful for CSMs, SEs, and managers
- Clear behavioral lever
Cons
- Quality of MBOs varies - can become subjective
- Requires manager discipline to evaluate
- Not a great primary motivator for closers
Best for
- CSMs, SEs, managers
- Roles where strategic behavior matters
- Reps in newly defined functions