When I first announced to my team that I was going to tie everyone’s quarterly bonus to the same revenue target, more than one of them said I was insane.
It is unusual for non-sales staff to be incentivised via bonuses, so my proposal came across as quite radical.
Salespeople have been paid via commission since the beginning of time, with the logic being that their job is to bring in the money: the more money they bring in, the more they get paid. If 40% or 50% of your salary is based on the deals you close, then you’re going to hustle.
Not to mention, an account executive's success is binary: Did the deal close or not? There's no equivalent number for a function like engineering. They’re not used to revenue-based bonuses because the quality of their code and the product they build isn’t seen as easily quantifiable.
As a result, most companies have adopted a key performance indicator (KPI) system, in which employees are graded and ranked at regular intervals by their manager depending on a set of metrics that they (and you) agree on.
But early on, I decided that instead of bonus-related pay for sales and flat salaries for the rest, everyone would move to variable compensation. Now, if we hit our combined targets, all employees receive a bonus. Because, regardless of role, everyone at a startup is ultimately measured against the same standard of how the company is performing as a whole.
Our north star metric at Abacum is annual recurring revenue (ARR), and every single member of the team contributes to that. The engineers build and maintain a best-in-class platform that our account executives then sell. Our marketing team distributes our brand and makes sure we show up to the right people and the right time. The people team makes sure we attract and retain top talent. And so on and so forth.
A question I often get asked is: how much is the bonus? The key thing about bonuses is that they must move the needle. A 5% bonus is not enough to motivate your employees to go above and beyond, so if you’re going to implement this system, you must make it a meaningful amount (I recommend >15%).
Another question I get asked is about equity: rather than incentivising your staff with cash bonuses, why not give them more of a stake in the company? That way, you can make employees owners without chipping away at your cash runway, always a precious commodity for a startup.
Equity is a crucial part of our compensation package, as it is for most startups, and an important way to ensure that employees are literally invested in success; however, it’s a long-term play. Equity packages typically come with one-year cliffs and four-year vests whereas bonuses are tangible and put money in your pocket now. This is why we offer both.
Working at a startup is not for the faint of heart, especially in 2026. We are expected to hit ambitious revenue targets with leaner and leaner teams. This can make even the best of employees burn out without the proper incentives: they see the pressure and the expectation without any of the upside.
Of course this goes both ways. Employees are financially rewarded when we hit our targets and when we don’t, we all pay the price. And this is intentional by design. Without sounding harsh, you need to make it hurt when the business doesn’t perform. I’m not talking about pointing fingers or dragging anyone over the coals, but when targets aren’t met, you need to have a serious conversation as a team to understand where you fell short and how to course correct. There have to be real consequences for both success and failure.
It is said so often to have become a cliché that a startup’s most valuable resource is its people, and in cities like Barcelona, London, or New York, the competition for top-tier talent is stiff to say the least and losing the right people can make or break a company.
At its heart, the message around variable compensation is this: it is no longer about how long you sit at your desk, but what you deliver when you are there.
