The Flawed Commission Scheme: How to Design Sales Incentives That Protect Profit Margins

Every month, you hand out fat commission checks to your sales team while watching your net profit margin shrink. You celebrate record-breaking top-line revenue numbers, yet your operating cash account barely covers next week's payroll. You tell yourself that sales fix everything. You assume that if you just close more deals, the overhead costs will dilute, the operational efficiencies will kick in, and profit will naturally follow. That financial logic is completely broken.