Capping Sales Bonuses – Why?

Can anyone explain to me why some companies cap sales bonuses? 20 years in sales and I still can’t get my head around why some businesses cap bonuses?

This follows on from two meetings I attended last week when asking my clients about the remuneration package I discover all their sales people have a bonus cap. When discovering this I always ask the obvious question – ‘Why do you cap the bonus?’

One client simply could not answer me and the other replied – ‘If we didn’t I know of two or three individuals here who would be earning more than our CEO’.

In addition to me asking if I could meet these individuals my immediate reply was the obvious, “And that would be bad because . . . . ?”

Maybe you guys might have the answer?


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