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If you asking the question: How do I design a compensation plan? The answer lies in tailoring a compensation plan that is suited to different employees’ skills and tasks. While money does motivate employees, you also have to take into account other profiles.
If we take an illustration of sales people, we will see that most sales people are of three types. These are bottom-line salesperson, social salesperson and knowledgeable salesperson. Each type is different from the other and when designing a compensation plan, you will have to take into each type’s characteristics so that they are motivated to perform.
For a compensation plan to be really effective, you will have to ensure that it mirrors the corporate culture. Therefore, a good compensation plan should have a blend of salary and incentives. It does not harm to conduct a compensation survey so that you get a median total on the salary for a particular job. In addition, the employer should make an effort to structure the compensation plan so that each person is paid according to performance.
In smaller and newer companies, income-producer formula works very well. In this formula, commission is paid based on a percent of revenue generated. The trick here lies in motivating the employees enough to generate profits for the company.
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In order to create a strategic compensation plan, you have to align the contributions of individual employees with the goals of the company. Although, this is a fact many companies are aware of, they are always stymied with how to create a strategic compensation plan. 
