Offering the right on-target earnings (OTE) package can make or break your ability to attract and retain top performers. A well-calibrated OTE benchmark helps you stay competitive, control compensation costs, and ensure internal fairness.
Let’s break down how to benchmark OTE compensation effectively - and why it’s a must for high-growth companies.
On-target earnings (OTE) refers to the total expected compensation when an employee meets all performance goals. This typically includes:
Base salary
Variable pay (commissions, bonuses, etc.)
Benchmarking OTE means comparing your compensation offers against market standards for similar roles, industries, and geographies. This process involves gathering data on base salaries, variable incentives, and total expected earnings across the market to ensure your OTE aligns with current standards. By doing so, you gain actionable insights into where your offers stand - whether they’re competitive, lagging, or leading - allowing you to make informed adjustments.
Effective OTE benchmarking not only helps maintain internal fairness but also ensures your pay strategy is optimized for attracting and retaining the talent you need to drive business growth.
Here’s why companies that benchmark OTE outperform those that don’t:
Candidates expect transparency and fairness, and they’re actively comparing compensation packages across potential employers. When your OTE compensation falls below market benchmarks, you’re signaling that you may not value talent at the same level as competitors - which deters ambitious candidates from engaging further in your hiring process.
This is especially true in competitive fields like sales and technology, where skilled professionals have multiple opportunities and are quick to move on if your offer doesn’t meet or exceed their expectations. By failing to offer a market-aligned OTE, you risk losing top performers to organizations that prioritize and clearly communicate strong, competitive compensation packages.
Underpaying high performers leads to churn. In today’s market, professionals are continuously approached with new opportunities - especially your top contributors. If they perceive their total compensation to be out of step with industry norms, they’re more likely to listen to competitors or actively seek alternative roles.
This turnover not only drains institutional knowledge but also disrupts team performance and drives up rehiring costs. By benchmarking and maintaining a strong, market-aligned OTE, you demonstrate a tangible commitment to rewarding results and valuing employee impact. This confidence in your pay structure helps retain key talent, limits poaching by competitors, and ultimately reduces overall flight risk - ensuring your best people choose to stay and grow with your organization.
If you make the OTE compensation unrealistic, it will naturally not have the same effect. An OTE plan should strike a balance - ambitious enough to motivate, but grounded in actual market performance metrics and real-world attainability. When the OTE target is set far above what’s realistically achievable, employees quickly become disengaged and lose trust in the broader compensation system.
Overpromising and underdelivering leads to frustration, diminished morale, and a perception that leadership is out of step with job realities. Over time, this misalignment fosters cynicism, making it difficult to rally teams around performance goals. High performers, in particular, are less likely to stay in an environment where targets feel unattainable and earnings potential is viewed as theoretical rather than real. For OTE to drive retention and high performance, ensure compensation plans are grounded in reliable benchmarks, clearly communicated, and realistically achievable for the majority of your team.
When your OTE is clearly positioned and backed by market data, offer acceptance rates climb - especially with experienced candidates. Seasoned professionals have a clear view of what leading employers are paying and expect detailed, data-driven explanations for how total compensation is structured.
When you provide candidates with transparent, well-benchmarked OTE figures that are competitive in their field and region, you build immediate trust and credibility. This clarity reassures top candidates that you value their expertise and understand current industry standards - making them more likely to accept your offer over alternatives that are vague or outdated. In a talent market where high performers have abundant options, a market-based OTE offer can be the deciding factor that turns an interested candidate into a committed hire.
You can’t scale a team if compensation is guesswork. Without clear, consistent, and data-driven guidelines, hiring managers struggle to determine fair offers, and existing employees may question the integrity of internal career progression. This uncertainty can create disparities, fuel resentment, and ultimately slow down headcount growth. Benchmarking builds internal equity while aligning with external expectations.
By implementing market-validated OTE benchmarks, you set standardized parameters for compensation that foster transparency and trust across your organization. This alignment not only ensures new hires are brought in on par with market rates, but also enables you to budget accurately for expansion, structure team growth efficiently, and support a scalable, sustainable talent strategy. With robust benchmarking practices, your team can grow confidently - knowing compensation decisions consistently support both company objectives and employee satisfaction.
Look for OTE data from trusted industry sources such as:
Radford/Aon, LinkedIn Salary Insights
Industry reports (e.g. SaaS benchmarks for sales roles)
Job boards and salary transparency tools (e.g. Levels.fyi, Glassdoor)
Pro tip: Benchmark OTE by job title, experience level, industry vertical, and location.
Different roles have different OTE norms. Here’s an example of OTE benchmarks:
| Role | Average Base | Variable (%) | Typical OTE |
|---|---|---|---|
| Sales Development Rep (SDR) | £55,000 | 30% | £75,000 |
| Account Executive (AE) | £70,000 | 50% | £140,000 |
| Customer Success Manager | £80,000 | 20% | £100,000 |
| Marketing Manager | £90,000 | 10% | £100,000 |
Each function within your organization operates in a distinct talent market with its own compensation expectations, incentives, and competitive pressures. For example, sales roles like SDRs and Account Executives frequently have a higher percentage of variable pay tied directly to performance metrics, while roles in customer success or marketing might emphasize base salary more and offer a lower variable component.
Benchmarking should account for these nuanced differences, ensuring that each job category’s OTE is calibrated against relevant market data for similar positions in your industry and region. By segmenting thoughtfully, you avoid a one-size-fits-all approach and instead create tailored, role-appropriate compensation strategies that effectively motivate and retain talent across the organization.
Your OTE benchmark in Stockholm won’t match that in London or Berlin. Each city - and even broader regions within countries - has its own cost of living, talent market dynamics, and compensation expectations, all of which should inform your benchmarking process. A competitive package in Stockholm may be perceived as below market in London due to significant differences in pay scales, living costs, or candidate competition. It’s crucial to use localized compensation data and adjust for variations in economic climate, industry maturity, and supply-demand trends to remain truly competitive wherever you hire.
Also, early-stage startups may trade higher equity for lower cash OTE, while enterprises offer more stable cash-heavy packages. For startups with limited cash flow, equity becomes a larger part of the value proposition, appealing to entrepreneurial candidates who are motivated by long-term upside. Another approach is to tie comp to performance, so if the business is successful the employee is successful.
In contrast, more established organizations tend to offer larger base salaries and higher cash variable components, providing candidates with predictability and immediate earning potential. Recognizing where your business sits on this spectrum - and explicitly benchmarking OTE by both geography and company growth stage - ensures your compensation structures are aligned with candidate expectations and market realities, ultimately supporting both recruitment and retention.
Markets shift fast. Review your OTE benchmarks at least twice per year to stay ahead of inflation, competitor moves, and candidate expectations. Markets can change rapidly, with shifts in inflation, competitor pay practices, and candidate expectations occurring in just a few months.
To ensure your compensation packages remain competitive and relevant, it’s essential to review and update your OTE benchmarks at least twice a year. Regular benchmarking enables you to proactively adjust to market dynamics, stay ahead of industry trends, and meet evolving candidate needs - helping you attract, motivate, and retain top talent in a constantly changing environment.
| Scenario | Risk |
|---|---|
| Too Low | Loss of candidates, low morale, poor retention |
| Too High | Compensation creep, misaligned expectations, budget strain |
| Inconsistent | Internal equity issues, perception of unfairness, team tension |
On-target earnings aren’t just a number - they’re a strategic signal to your team and the market. When you benchmark OTE correctly, you build trust, attract top performers, and create a foundation for growth.
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At Bentega, we help modern companies design data-backed OTE compensation structures that attract top performers and drive scalable growth. Whether you're defining OTE benchmarks for sales, customer success, or marketing roles, we bring compensation clarity to your talent strategy. Explore how we support your team at www.bentega.io.