10 MBO sales Hacks Every Business Should Implement for Sales Compensation Success

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Ever wonder why some sales teams crush their targets while others barely scrape by? The difference often comes down to one thing: clarity. Sales reps who know exactly what’s expected of them, and how their efforts connect to the bigger business goals, are far more likely to hit the bullseye.

That’s where Management by Objectives (MBO) shines, it's all about setting clear goals, measuring progress, and aligning personal targets with company outcomes. But let’s be real: if you’re not doing it right, MBO can feel like just another corporate buzzword.

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So how can you make MBO work for you? In this blog, we’re sharing 10 sales hacks to turn your MBO plan into a powerhouse.

These aren’t just tips you’ll skim over, they’re actionable strategies to engage your team, boost performance, and get results. 

What is Management by Objectives (MBO) and How Does It Relate to Sales Compensation?

MBO is a performance management strategy that sets clear objectives for individuals or teams, ensuring that they understand exactly what is expected of them. When applied to sales compensation, MBO helps define what success looks like for each sales rep and ensures that their rewards are aligned with specific business goals, like revenue growth, market penetration, or customer retention.

Studies suggest that 82% of companies that set clear objectives see improved employee engagement, leading to better overall performance​

Some key characteristics of successful MBO metrics are:

• Quantitative

MBO goals are measurable, whether it's sales revenue, the number of deals closed, or customer satisfaction scores.

• Aligned

 The goals set at the individual level should be in sync with broader company objectives.

• Trackable & Influential

Sales reps should be able to see how their efforts impact their goals, and the goals should be within their control to influence.

Why MBO Matters in Sales Compensation

MBO can bridge the gap between what your team is doing day-to-day and where your company wants to go.

Instead of vague expectations, reps know exactly what success looks like, how they’re tracked, and what rewards they’ll get for hitting their targets.

1. It aligns individual performance with company goals
   When your salespeople know their targets are linked to the company’s bigger objectives, they feel more invested in the outcome.
   
   
2. It provides measurable benchmarks
   MBOs are all about setting clear, trackable goals, which means there’s no ambiguity around what success looks like.
   
   
3. It promotes transparency and accountability
   With MBO, everyone knows exactly what they’re aiming for and how their performance is being measured.

Now, let's jump into the 10 MBO hacks that will make your sales compensation plan pop.

10 MBO Sales Hacks & Strategies for Sales Compensation Excellence

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1. Set Clear, Achievable Goals

The first step in any successful MBO system is setting SMART goals, that are Specific, Measurable, Achievable, Relevant, and Time-bound. If your sales goals are unclear or unrealistic, your team won’t know where to focus their efforts. By setting achievable targets that align with your company’s priorities, you can help your sales reps stay motivated and productive.

Example: Instead of a vague goal like “increase sales,” set a more targeted goal such as “increase sales of product X by 15% in Q1.”

2. Align Compensation with Business Objectives

Compensation should reflect the overall business strategy. If your company is focusing on market expansion, for instance, tailor the compensation plan to reward activities that promote this goal, whether that’s securing new customers or growing existing accounts.

MBO models have reported up to a 20% improvement in sales performance due to clearer alignment between individual efforts and company goals

Example: If expanding into a new market is a priority, offer additional incentives for acquiring new customers in that region.

3. Use Data-Driven Decision Making

Sales leaders should leverage data to track performance, adjust compensation plans, and identify trends. Regularly assessing sales data allows you to make informed decisions about how to optimize compensation strategies for the best results.

Example: If you notice that certain sales reps consistently exceed quotas, reward them with higher commission rates, or consider expanding their territory to leverage their skills.

4. Implement Regular Performance Reviews

MBO thrives on ongoing feedback. Regular performance reviews (quarterly or monthly) allow managers to assess whether objectives are being met and provide an opportunity to recalibrate goals when necessary. These reviews also give salespeople a chance to ask questions, get clarification, and stay engaged with the process.

Example: A monthly check-in might focus on the sales rep's progress toward their goals, adjusting quotas based on market shifts.

💡Additional Read: How to Improve Sales Performance Reviews Template to Make Them Valuable

5. Foster a Competitive Yet Collaborative Environment

Healthy competition can motivate your sales team, but collaboration can drive even more success. MBO is most effective when sales reps understand that their individual performance contributes to the larger goals of the company. Building a team-based culture where everyone shares in the success can enhance motivation.

Example: Consider creating team-based objectives where compensation is tied not only to individual performance but also to overall team success.

6. Offer Tailored Incentives

Not every salesperson is motivated by the same thing. Some may be driven by commissions, while others value recognition or personal development. By customizing incentives to each individual, you can make sure everyone stays engaged and motivated.

Looking to learn how to create effective incentives for your sales team? Read our full post and start shaping your winning incentive plan today: Sales Team Incentives: Your Complete Guide

Example: A top performer might prefer a monetary bonus, while someone else might appreciate extra time off or a special recognition event.

7. Communicate Clearly and Consistently

Clear communication is vital in an MBO system. Sales reps need to understand how their objectives are tied to their compensation. Regularly update your team on any changes to the compensation plan and how they can achieve their goals.

Example: Hold a quarterly meeting to remind the team of the goals and performance metrics and celebrate any milestones.

8. Provide Ongoing Training and Development

A well-informed and skilled sales team is a productive one. Use MBO as an opportunity to promote ongoing development by tying training to goals. Offering training programs on new products or sales strategies can directly support your team in reaching their targets.

Example: Offer a reward for completing an advanced sales training program that helps reps close more deals.

9. Monitor and Adjust Strategies Regularly

Even the best-laid plans need tweaking. Regularly monitor sales progress and be prepared to adjust goals or compensation strategies to keep your team on track. Sales markets can change quickly, and your strategy should be flexible enough to adapt.

Example: If a sales rep has been underperforming due to external factors (like economic downturns), adjust their goals to make them more attainable without lowering standards.

10. Recognize and Reward Top Performers

Celebrating success not only boosts morale but also sets a standard for others to follow. Recognition doesn’t always need to be financial—it can be as simple as highlighting top performers in team meetings or offering a special perk for outstanding achievements.

Example: Create a “Sales Rep of the Month” program with a special lunch or an award, alongside a bonus for the highest achiever.

How to Effectively Execute Management By Objectives for Sales Teams

Executing MBO successfully requires strong governance and support systems to ensure its effectiveness. Here’s how you can make sure your MBO strategy works:

• Strong MBO Governance

Having clear rules and frameworks in place for setting, tracking, and evaluating objectives is essential. This ensures consistency and fairness across the board, which helps maintain morale and trust.

• Manager Training & Support

Sales managers need to be well-versed in the MBO process. Regular training ensures they understand how to set appropriate goals, offer support, and provide constructive feedback to their teams.

• Incentive Compensation Management Tool

Tracking sales performance and aligning it with company goals can feel like juggling a dozen tasks at once. That’s where Incentive Compensation Management (ICM) tools come into play, making the whole process smoother and more efficient. Tools like Kennect are designed to streamline this experience by allowing managers to set clear objectives, monitor progress in real time, and incentivize and generate reports, all from one platform.

This means your salespeople know exactly where they stand and how they can earn their rewards, while you can focus on driving strategic growth, rather than getting bogged down in administrative tasks.

Wrapping It Up!

Alright, sales leaders, let me ask you this:

• Do your salespeople know exactly what’s expected of them?
• Are they motivated to hit more than just their quotas?
• Are your sales goals actually in line with your company’s bigger objectives?

If your answers are anything like “Well, sort of…” or “I think so, but not really sure,” then here’s a friendly nudge: it might be time to introduce Management by Objectives (MBO).

MBO isn’t just another management fad, it’s about setting clear, actionable goals that align directly with both individual performance and your broader business strategy. MBO could be the clarity you’ve been looking for to get everyone on the same page and moving in the right direction. 

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