The power of incentive compensation extends far beyond traditional sales commissions. It is now a key driver of organizational growth as businesses adapt to new economic challenges and competitive landscapes.
According to CaptivateIQ’s “2025 State of Incentive Compensation Management Report,” more than half of companies (59%) are prioritizing incentive programs to fuel growth while aligning performance with both short-term wins and long-term strategic goals.
CaptivateIQ CMO Katie Foote discussed the finding of the report, including the expanding use of incentive plans beyond sales teams, how to build a compelling case to have your employer modernized incentive systems and how artificial intelligence (AI) will impact incentive compensation programs over the next five years.
Demand Gen Report (DGR): Incentive programs are often cited as drivers of organizational growth. Based on the report findings, what are the most common ways companies currently use incentive compensation to fuel growth?
Katie Foote: Incentive compensation has long been a tool for motivating individual performance, but in today’s economic environment, it plays a role in driving broader long-term organizational growth. According to CaptivateIQ’s 2025 State of Incentive Compensation Management Report, more than half (59%) of companies say they’re prioritizing incentive programs as a way to support growth initiatives.
What’s especially interesting is how these programs are starting to evolve beyond just sales roles. More organizations are using incentives to align teams and departments around shared goals, reinforce strategic outcomes, and build more accountable, performance-driven cultures. This reflects a deeper understanding that compensation has the power to shape company culture – not just quarterly results.
There’s also a growing recognition that compensation can’t just be reactive; it has to be tied to forward-looking goals. For example, as companies face pressure to do more with less, they’re rethinking plan design to emphasize efficiency, retention, and cross-functional collaboration.
DGR: Nearly 59% of companies are turning to incentive plans to support business growth, yet many fail to yield the expected results. Why do you think there’s a gap between implementation and effective execution?
Foote: The gap between intention and impact often comes down to execution. The report shows that while many companies are investing in incentive compensation as a growth driver, most aren’t fully equipped to operationalize those strategies effectively. For example, less than one-third of compensation professionals feel “very prepared” to navigate economic uncertainty, and only 39% have automated their ICM workflows, which is a crucial step toward building fast, scalable, and accurate program execution.
This disconnect leads to a variety of issues: plans that are misaligned with business objectives, payout models that don’t motivate the right behaviors, and reporting that lacks the insights needed to optimize performance.
Without the right infrastructure, even the best-laid plans can underperform. Teams end up relying on outdated tools, disconnected data, and processes that don’t keep pace with changing goals. The result? Incentive models that miss the mark and fail to drive the right outcomes. Ultimately, this could hurt business revenue.
DGR: With 42% of organizations failing to gain visibility into ROI, what steps can companies take to align their compensation strategy with measurable business outcomes?
Foote: One of the clearest signals from the report is: visibility into compensation performance is still elusive for many organizations—42% say they lack the ability to effectively measure ROI, which is striking given how much budget and strategic weight these programs carry. That lack of visibility makes it difficult to understand what’s working, what’s not, and how to course-correct. It also makes it harder to justify the investment to leadership, especially when budget is tight everywhere.
To move forward, organizations need to pair plan design with robust measurement frameworks. This means establishing clear KPIs tied to business outcomes (not just activity metrics) and investing in tools that reveal performance insights across roles, departments, and timeframes.
The companies that are ahead of the curve here are using dashboards and automated reporting to track payout alignment, identify areas of leakage or inefficiency, and make data-informed decisions about future plan design. The more integrated your compensation and analytics functions become, the easier it is to prove value and drive it.
DGR: Modern AI and real-time insights are emerging as essential tools. How do you envision AI and automation evolving incentive compensation programs over the next five years? Can you provide examples of how these technologies are reshaping incentive compensation programs at an enterprise level?
Foote: AI is quickly becoming the engine powering more strategic, adaptive incentive compensation. What began as a way to reduce manual tasks is now evolving into a tool for forecasting, real-time performance monitoring, and anomaly detection. According to the report, nearly 60% of companies plan to invest in AI and automation to improve their ICM programs— a clear sign that teams want more than just administrative efficiency; they’re seeking insight and agility.
We’re already seeing enterprise teams apply AI to identify underperforming plans mid-quarter, giving them time to adjust targets or behaviors before the quarter closes rather than realizing misalignment after bonuses are paid.
Over the next few years, we expect AI to enable more personalized incentive models that adapt to individual roles, goals, and market conditions. This shift away from rigid, one-size-fits-all plans toward dynamic, data-driven compensation design will help companies drive better outcomes in a climate where every dollar and every deal counts.
DGR: Another trend noted is the expanding use of incentive plans beyond sales teams. Which additional departments stand to benefit most from these programs, and how can organizations ensure success in implementing cross-functional incentives?
Foote: We’re entering a phase where every team— not just sales— has a clear line to revenue impact. That’s why incentive programs are gaining traction in departments like marketing, customer success, finance, and even operations. These teams are being held accountable for measurable outcomes, but they haven’t always had compensation structures aligned with their goals.
The report found that companies are already extending variable compensation to non-sales roles, signaling a widespread appetite for incentivizing broader performance. Marketing, in particular, stands out. When marketers are measured against pipeline generation or campaign conversion goals, aligning incentive structures to those KPIs can sharpen focus and drive stronger collaboration with sales.
However, organizations need to move away from retrofitting sales comp plans and instead develop frameworks that reflect each team’s objectives. Transparency, clear eligibility criteria, and outcome-based KPIs are essential to make these cross-functional programs stick and actually deliver value.
DGR: Lack of leadership buy-in is flagged as a major recurring challenge. What advice would you give to compensation professionals looking to build a compelling case for modernized incentive systems?
Foote: Leadership buy-in doesn’t come from surface-level results. It comes from proving that compensation programs are directly tied to business performance. For compensation professionals, that means reframing ICM as not just an HR or finance function, but a business-critical lever that can accelerate growth, improve retention, and reduce wasted spend.
And we know many organizations lack visibility into ROI from their incentive plans, making it difficult to make a case for further investment or transformation. The solution? Build a dashboard of wins. Highlight where incentive plans directly led to improved quota attainment, team productivity, or better cross-functional alignment.
DGR: With 35% of companies experiencing compensation inaccuracies, how can organizations proactively mitigate these errors and build trust with their sales and performance teams?
Foote: The opportunity to modernize helps prevent payout errors that erode trust and eat into margins. When employees doubt the accuracy of their pay, motivation drops, disputes rise, and retention suffers.
Automation is the first step: moving away from spreadsheets and siloed systems to reduce unavoidable human error. And transparency is just as important. People should be able to see exactly how their earnings are calculated and where they stand against their goals. That visibility turns compensation from a black box into a performance driver and the companies getting this right are building trust in the process.
DGR: For organizations aiming to align incentives with cross-functional business objectives, what metrics or KPIs should they be prioritizing to ensure measurable outcomes?
Foote: When expanding incentives beyond sales, the first challenge is defining success— what does “good performance” look like for each role? Instead of using revenue as a catch-all metric, companies should align incentives to departmental KPIs that ladder up to broader goals.
According to the report, the top performance metrics used across functions include customer retention, deal velocity, and revenue growth, but there’s increasing emphasis on shared outcomes like customer satisfaction, pipeline acceleration, and product adoption. These are critical in a go-to-market environment that depends on tight alignment between sales, marketing, and success teams.
It isn’t always about individual output. The most effective companies use compensation to reinforce collaboration. That means measuring team-based objectives and tying a portion of incentive pay to collective performance. This approach creates a shared sense of ownership across departments, and it helps ensure that incentive programs aren’t just driving motion, but actual business impact.
Outside of metrics, it’s also important to create a closed loop system between go-to-market planning and incentives so leaders are able to incentivize the behavior upfront that gets them to their plans and monitor the impact throughout the year. While this seems obvious, it’s often easier said than done, in fact we found 33% of incentive comp teams noted that a lack of alignment across planning and incentives has resulted in poor sales behavior and another 31% found that a lack of alignment makes it difficult to adapt to changes in strategy.
DGR: How can B2B marketers leverage findings from the report to create incentive strategies that drive both short-term wins and sustainable, long-term growth?
Foote: B2B marketers today are expected to deliver results fast, but the real challenge is doing it in a way that’s repeatable and sustainable, without burning out teams or overspending.
The 2025 State of Incentive Compensation report found that teams who tied incentives to revenue impact, not vanity metrics, saw better sales alignment and higher ROI. It’s a clear signal: when comp reflects true business outcomes, it drives the right focus. For marketers, that might mean rewarding sourced pipeline, lifecycle acceleration, or partner influence, not just MQLs.
The bottom line: Use incentives to reinforce what actually drives growth. Short-term wins are important, but long-term success comes from motivating the right behaviors across the funnel.
