What should incentive compensation look like when it’s treated as a driver of strategic outcomes — not just a line item to manage at the close of each quarter?
For our 2025 State of Incentive Compensation Management Report, we surveyed over 200 compensation leaders to better understand how their programs are evolving in the age of AI and innovation, where they’re gaining traction (and hitting roadblocks), and what it takes to position Incentive Compensation Management (ICM) as a catalyst for efficient growth.
ICM In
Uncertain
Times
While incentive compensation can be a powerful driver of efficient growth amid uncertainty, most teams aren’t fully prepared to realize its potential. Too few feel ready to adapt to economic shifts, many lack clear ROI insights, and the majority haven’t automated key pieces of their programs — creating persistent risks for errors, inefficient processes, and barriers to scalability. As a result, compensation teams – bogged down by manual tasks – aren’t agile enough to deliver the impact their businesses need.
Less than ⅓ report feeling very prepared for economic shifts and market volatility
The biggest challenge for comp professionals today is a lack of visibility into program ROI
Only 39% have increased automation as a cost-reduction strategy in the past year
Nearly half of compensation teams surveyed have both over- and underpaid on commissions within the last year
56% are prioritizing seller productivity this year...
...but only 38% are prioritizing cost savings initiatives
“Ensuring timely and accurate calculations is always the top priority. But to get there, you need a well-organized and agile process.”
Only 39% have increased automation as a cost-reduction strategy in the past year
Nearly half of compensation teams surveyed have both over- and underpaid on commissions within the last year
Nearly half of compensation teams surveyed have both over- and underpaid on commissions within the last year
Incentives
Fuel Scalable
Growth
Especially in uncertain times, incentive compensation remains one of the most reliable levers to drive growth — aligning rewards to performance, cross-functional priorities, and long-term impact. In fact, the most forward-thinking teams are expanding the power of incentives beyond sales, analyzing performance and adjusting plans as needed, and aligning incentives directly to growth.
72% of orgs plan to expand incentive compensation plans to new departments
Reviewing and adjusting plans more frequently correlates to higher reported revenue growth
59% are prioritizing incentives as a lever to support growth strategies
Incentives are a major driver in achieving a specific business goal
Bridging The
Trust Gap
Incentive compensation programs work best when they’re clearly understood – but many organizations still face friction caused by gaps in 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.
Over ⅓ say that a lack of transparency for sellers about how incentive compensation is calculated is a top challenge for their teams
Only half of organizations provide sellers with real-time visibility into current and potential earnings
55% who use AI say it has improved real-time visibility for sellers
Just 26% have prioritized reduced seller attrition this year
Less than ¼ are actively prioritizing over- or under-paying sellers
“Stay close to what’s happening in the field. And be willing to iterate. You don’t need perfection — you need clarity, trust, and alignment. If you have those, your comp plan becomes a real growth engine, not just a monthly headache.”
55% who use AI say it has improved real-time visibility for sellers
The Case
For Change
For many compensation professionals, the need to modernize ICM is clear – but securing leadership buy-in is a challenge. While cost savings can help make a compelling case, the risks of not innovating are greater than many leaders recognize.
Cost savings resonates most with leadership when making a case for an ICM change.
..but over ⅓ say business leaders underestimate the true cost of manual processes
Download the full 2025 State of Incentive Compensation Management Report
For an even deeper dive into our survey results including our top insights, takeaways, and recommendations and learn more about what they mean for ICM’s impact on your own organization.