Bonuses and Earnings Glossary

Bluebird

A bluebird is an unusually large sale creating exceptional earning for a participant.

Bonus

A bonus is an opportunity to earn money for achieving specific results. Often companies view bonuses as stretch goals or an area of emphasis.

Bonus (lump sum)

A specific amount is paid out when a level of attainment is achieved.

Cap

A cap is the maximum amount a participant can earn in a given period for an incentive measure or all incentive measures combined. Caps can dilute motivation.

Discretionary Bonus

A discretionary bonus is a periodic additional bonus opportunity that is above the compensation plan. A discretionary bonus is allocated to specific individuals and is usually not determined based on formulas.

Earnings

Earnings are the amount of commission (or bonus) calculated for a specific sales rep for a given period. Note: This does not include manual adjustments and may not be actually paid out to the sales rep in a specific period (e.g. you calculate monthly but pay quarterly).

Earnings Curve

A graphic representation of the planned earnings for the compensation plan. The linear curve is a straight line. Progressive curve increases as the attainment percentage increases. This is used when the higher levels of attainment are more difficult and more profitable. The goal is to reward the increased effort required. Regressive curve decreases as the attainment percentage increases. This is used when additional sales are easy and to avoid windfalls and additional sales being unprofitable. The combination curve uses a step rate, one or more rates to a performance level combined with other options mentioned above.