Sales Compensation Trends & the Performance Basis of Pay Compression in 2026
If it feels like sales compensation is changing faster than ever—you’re right. Over the past few years, market shifts, economic uncertainty, and higher performance expectations have completely reshaped how companies pay their sales teams.
The old “growth at any cost” approach is long gone. In 2026, sales compensation is about precision: rewarding results, driving efficiency, and making sure every dollar spent supports real performance.
Across industries, the latest sales compensation trends show one thing clearly—performance now impacts pay more directly than ever before. Top reps are taking home bigger paychecks, while average and newer sellers are feeling the squeeze. And that leads us straight into one of the biggest talking points this year: pay compression.
What is Pay Compression?
So, what exactly is pay compression?
In simple terms, it’s what happens when the difference in pay between employees starts to shrink, even when their experience or performance varies a lot. In sales, that can mean new hires earning nearly what seasoned reps make—or top performers being paid too close to their middle-of-the-pack peers.
The result? Motivation drops. Fairness gets questioned. Teams lose momentum." and teams start to lose momentum. The trick isn’t just identifying what pay compression is—it’s figuring out how to fix it while still rewarding results.
Too much compression discourages top sellers. Too little can make newer reps feel like they’ll never catch up. In 2026, finding that balance is more important than ever.
The 2026 Reality: Performance Rules Everything
The pay gap between top and average Account Executives hit $200,000 in 2025—the widest spread in five years. Meanwhile, new sales reps are earning less than they did in 2021, and Account Managers are seeing their performance bonuses flatten.
Welcome to 2026, where sales compensation isn't just changing—it's creating a new problem that's threatening retention, motivation, and team stability: pay compression.
If you're in sales leadership and haven't stress-tested your comp plans against these trends, you're likely already feeling the effects.
According to Xactly’s 2026 State of Sales Compensation report, sales pay is going through a major reset. Companies are shifting resources toward the reps who consistently deliver, tightening expectations for everyone else, and rethinking their incentive structures. All signs point to a consistent theme: companies are paying more for proven results—and less for potential. In so many words, pay compression is being assessed and, hopefully, better mitigated in today’s organizations.
Why Pay Compression Matters
Here's what that means in practice: organizations now focus on compensation for experienced sellers who know how to produce steady results.
Since 2021, OTEs for AEs with five or more years on the job have jumped significantly, while those for early‑career reps have dropped. It’s a clear move toward stability and efficiency.
But there’s a flip side to that strategy. When newer reps start too low—and don’t see quick earning potential—it can slow their motivation, extend ramp time, or even push them to look elsewhere.
In other words, optimizing for short-term performance can unintentionally limit long-term growth. If new talent doesn’t see a fair or attainable path forward, pay compression creeps in, and the talent pipeline weakens.
Account Executives: The Expanding Gap
Look at the data on Account Executives, and the trend is impossible to miss. The difference between what top and lower performers earn has kept growing every year. In 2025, that earnings gap was nearly $200,000—up significantly from just a few years ago.
Top performers are being rewarded through higher accelerators, better territories, and more lucrative variable pay. Lower performers, meanwhile, are seeing smaller bumps in pay, pushing their earnings bands closer together.
While that approach certainly highlights a pay-for-performance culture, it also intensifies pay compression within the broader team. Middle performers risk getting stuck in no-man’s-land: not earning enough to stay motivated, but under too much pressure to perform perfectly.
Account Managers: Steadying the Ship
Account Managers tell a different story. Their pay gap, which had been climbing since 2021, started to shrink last year—dropping from about $181,000 to $162,000. That’s a big sign that companies are rebalancing how they reward AMs.
Instead of focusing only on deal expansion, many organizations are putting more emphasis on customer retention, account coverage, and collaboration. It’s a smart move in today’s environment, where long-term customer value matters just as much as new wins.
The risk? Overcorrecting. When pay structures prioritize stability over performance, top AMs can see their earning potential shrink by 20-30%. That's when disengagement starts, and retention problems follow. Smart compensation leaders design structures that reward both reliable performance and exceptional results.
Local Markets, Local Pay: The Regional Pay Trend
Lead Generation teams are also evolving. Pay differences between high and low performers are widening in North America and EMEA, but shrinking in APAC.
This tells us that one-size-fits-all global pay models are fading fast. Mature markets are leaning into performance-based pay, while emerging regions are emphasizing predictability and teamwork.
For enterprise leaders, the takeaway is clear: regional flexibility is now essential. Pay design needs to reflect local realities without losing sight of broader business goals.
The Cost of Sales Compensation Resets
Here’s another major shift in the current sales compensation trends—companies are rethinking their cost-of-sales strategies.
Over the last five years, top performers’ compensation cost per dollar of quota (known as CCOS) has gone up, while quotas themselves have gone down. That might sound counterintuitive, but it makes sense: businesses are choosing to “pay for certainty.”
In practice, that means companies are okay spending more on their elite performers because they know those reps deliver consistent, high-value outcomes. It’s a trade that prioritizes reliability over pure efficiency.
The challenge? When too few people carry too much of the burden, it increases risk. A smaller group of top sellers means more vulnerability if even one of them leaves or misses target.
Pressure, Quotas, and People
Of course, the push for better efficiency has had ripple effects. Higher quotas, lower OTEs for newer reps, and tighter performance bands can create morale and retention issues—especially in mid-tier teams.
Rising turnover among lower or middle performers is a red flag. It can leave organizations overly dependent on a handful of high producers and weaken the future bench of talent.
The lesson: a strong sales compensation plan doesn’t just reward current stars. It builds the next generation of them, too.
How Do You Fix Pay Compression? 5 Proven Methods
Navigating these changes doesn’t mean reinventing everything—it’s about getting intentional. Here are a few ways compensation leaders can manage pay compression while keeping motivation high:
- Use market data regularly. Stay current on pay ranges and quota expectations so your plans stay fair and competitive.
- Model scenario impacts. Test how adjustments to quotas, accelerators, or base pay affect both cost and motivation before rolling them out.
- Balance base and variable pay. Match the mix to each role—hunters need more upside; retainers need stable rewards.
- Show career growth. Offer visible compensation paths so new reps can see a future without leaving.
- Reward collaboration, not just wins. Encourage retention, teamwork, and customer value creation—not just revenue spikes.
With that balance in place, compensation leaders can turn pay compression into opportunity.
Turning Data into Action with Xactly
If one message sums up 2026, it’s this: performance drives pay. Companies reward performance aggressively, but the smartest balance those rewards with fairness and long-term motivation.
That’s where Xactly comes in.
With decades of proprietary data and AI-backed insights, Xactly Incent helps companies design compensation plans that motivate every rep while keeping pay aligned with company performance.
Xactly’s solutions let you:
- Benchmark pay and quotas globally to stay competitive and cost-efficient.
- Run what-if models before you launch changes that affect your teams.
- Spot pay compression early so you can take proactive action before morale dips.
- Track every payout in real time, improving transparency and compliance.
- Connect incentives directly to business results, ensuring every payout drives measurable growth.
In a world where every sales dollar matters, the best compensation strategy is powered by clarity, data, and adaptability.
Interested in seeing how Xactly can help your team tackle pay compression and stay ahead of 2026’s sales compensation trends?