How do we handle comp when a rep transfers between territories, and does their old quota still apply?
Transition comp rules: old territory quota applies for 30 days overlap, then switch to new territory quota. This prevents reps from sandbagging old territory or padding new territory baseline. The mechanics are messy; you need written policy or you'll have five reps with five different agreements.
Typical Transition Scenarios:
| Scenario | Old Quota Effect | New Quota Effect | Transition Period |
|---|---|---|---|
| Promotion (AE → Senior AE) | Waived after 30 days | New higher quota starts day 1 | 30 days |
| Territory swap (equal size) | Stays for 30 days | New territory quota day 1 | 30 days |
| Demotion (Senior AE → AE) | Waived immediately | Lower quota starts day 1 | Immediate |
| Expansion role (1 → 2 territories) | Old quota stays; new quota added at 75% | Both quotas active, weighted sum | 60 days |
| Churn/low perf territory reassignment | Old territory re-assigned; rep paid commission until handoff date | New territory quota day 1 | 45 days |
The 30-Day Overlap Window:
Why this works:
- Old territory reps finish deals. If AE moves on day 1, who closes the $200k deal that's 70% done? That rep stays to close; you credit commission to them (not the incoming rep).
- Prevents sandbagging. Rep who knows she's leaving won't hold deals back to inflate new territory baseline.
- Prevents front-loading. Incoming rep won't pull deals forward to inflate Month 1 performance.
- Handoff completeness. 30 days is enough time to transfer account relationships, pending proposals, and forecast data.
New Territory Baseline (the Hidden Complexity):
When a rep gets a new territory, management often soft-resets the quota for "fairness." This creates comp chaos:
Option A (Clean Start): New territory gets Year 1 quota of $500k. Rep hits $650k in Year 1. Earns accelerator bonus. Then Year 2, baseline expectation becomes $650k+ (they've proven capacity). Most reps expect Year 1 to be "ramp year" but finance expects it to be permanent baseline.
Option B (Market-Adjusted): New territory historical performance was $400k ACV per rep. Incoming rep's Year 1 quota: $400k × 1.1 = $440k. Year 2: $600k (2-year incumbent expectation). This requires historical territory data and is fair but complex to communicate.
Option C (Fixed Ramp): All new territory assignments use 75% Year 1, 85% Year 2, 100% Year 3. Same quota for all transfers regardless of territory. Easy to administrate; feels arbitrary to high performers.
Commission on Old Territory (30-Day Overlap):
If outgoing rep closes a deal in old territory during the 30-day overlap:
- Outgoing rep gets commission (they sourced it, they close it).
- Incoming rep gets commission only if they materially contributed (unlikely in 30 days).
- Finance issue: How do you book the $150k deal? You might credit both reps partial commission (50/50 split), or all to outgoing rep, depending on close date and who signed the contract.
Best practice: Deal closes on [date]. If [date] is within 30 days of transfer, old rep gets 100% commission. After 30 days, new rep owns all deals in that territory.
Deal Acceleration (the Moral Hazard):
Outgoing rep knows she's leaving; she accelerates deals to close them before transfer, puffing her commission and EOP bonus. Incoming rep gets lean territory. Fix: cap commission on deals closed in final 30 days before transfer at 50% (rest held for incoming rep).
Pavilion research shows deal timing becomes erratic in the 45 days surrounding transfers without this incentive management.
Red Flags:
- Rep transferred; no written policy on quota adjustment. Later, she claims she wasn't paid fairly in new territory.
- Overlap period >60 days (territory ownership gets confused).
- Old territory rep stays "on commission" for 6+ months post-transfer (creates zombie accounts).
- New territory quota isn't announced at transfer date (rep doesn't know what she's being measured against).
TAGS: compensation,territory-transfer,quota,sales-ops,cro-ops