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How to Communicate OTE to Employees Effectively

Clear communication around On-Target Earnings (OTE) is critical for motivating staff and building a high-performance culture. Whether you're launching a new OTE model or optimizing an existing one, employees need to understand how their compensation works, why it’s structured that way, and what they need to do to achieve it.

In this article, we explore best practices for transparently conveying OTE structures to your team so that you can inspire confidence, retain top talent, and drive results.

What's in OTE

What Is OTE and Why It Matters

On-target earnings (OTE) refers to the total expected earnings for an employee when performance targets are fully met. It typically includes:

  • Base salary

  • Variable pay (commissions, bonuses, or other incentives)

OTE ensures alignment between company goals and individual performance by incentivizing outcomes that matter - whether that's closing deals, retaining customers, or generating leads.

But OTE can only motivate employees if they truly understand it.

Why Communicating OTE Transparently Matters

Lack of clarity around compensation can lead to:

  • Distrust in leadership

  • Disengagement or confusion

  • Underperformance due to unclear targets

By clearly explaining OTE structures, you help your team:

  • See the path to full earnings

  • Focus on performance-based outcomes

  • Feel motivated, valued, and informed

5 Strategies for Communicating OTE to Employees

1. Use Simple, Visual Breakdowns

Show how base salary and OTE are calculated using charts, pie graphs, or tables. Include:

  • Total OTE

  • What percentage is base vs. variable

  • The performance metrics tied to payouts

With Bentega, employees gain real-time visibility into their variable compensation though personal dashboards, supported by intuitive visuals and a transparent breakdown of exactly how each component is earned.

2. Provide Role-Specific Context

Don’t generalize. Tailor your explanation based on roles:

  • Sales teams: tie OTE to revenue or quota

  • CSMs: align OTE with renewals or NRR

  • Marketing: connect OTE to pipeline contribution

Don’t generalize. Tailor your explanation based on roles:

For Sales teams, link OTE directly to revenue generation or achievement of quota, making it clear how exceptional performance results in tangible financial rewards. Highlight which sales metrics—such as closed-won deals, upsell opportunities, or new customer acquisitions—drive variable pay, so that goals feel personalized and directly relevant to each rep’s daily activities.

For Customer Success Managers (CSMs), align OTE with metrics like renewals or net revenue retention (NRR). Break down how their compensation is tied to customer satisfaction, contract expansions, or reducing churn, emphasizing the value of nurturing long-term relationships and maximizing account growth.

For Marketing teams, connect OTE to pipeline contribution, such as qualified leads generated or contributed revenue. Detail how campaign effectiveness, demand generation, and collaboration with Sales influence their variable pay, showing that their efforts meaningfully advance company objectives and are recognized in their overall earnings structure.

By providing role-specific context, you show employees the direct link between their unique responsibilities and earning potential, fostering a deeper sense of engagement, purpose, and motivation across the organization.

3. Explain the ‘Why’ Behind Targets

Clarify how targets are set:

  • Market benchmarks

  • Business goals

  • Team performance history

This builds trust and buy-in around your OTE compensation structure, ensuring employees feel confident that their goals are fair, transparent, and achievable. When people understand not just what their targets are, but also how and why those targets are set, they are more likely to stay engaged and committed to reaching them. This clarity paves the way for open dialogue, increases employee satisfaction, and strengthens the connection between individual contributions and overall company success.

4. Incorporate OTE Into Onboarding & Reviews

Introduce OTE on day one and reinforce it in:

  • Quarterly reviews

  • Compensation planning cycles

  • Promotion or territory changes

5. Encourage Questions and Feedback

Create space for employees to ask:

  • How is my OTE calculated?

  • What happens if I exceed target?

  • What if company metrics shift?

Transparent communication builds a culture of motivating staff through clarity. When employees understand the structure and reasoning behind their compensation, it eliminates uncertainty and fosters a sense of security and empowerment.

By making OTE details accessible and easy to comprehend, you encourage active engagement, promote accountability, and give every team member a clear roadmap for personal and professional growth. This transparency not only supports higher performance, but also creates an environment where team members feel respected, valued, and more motivated to achieve shared objectives.

Ongoing Communication = Ongoing Motivation

OTE should not be a once-a-year conversation.
It should be a continuous dialogue about:

  • Goals

  • Expectations

  • Rewards

When you communicate OTE consistently, you motivate employees to own their success - and help your company grow predictably. Regular, open conversations about earnings expectations and achievements ensure that compensation never feels like a moving target. Instead, staff are empowered with a clear understanding of how their contributions directly impact their income and their future with the company.

This ongoing transparency not only builds alignment and trust but also equips every member of your team to set and reach ambitious goals, fostering a sense of ownership that drives both personal and organizational performance year-round.

Key Takeaways

  • Clearly define OTE as base + variable pay

  • Visualize OTE breakdowns for each role

  • Tie compensation to real, measurable outcomes

  • Discuss OTE early and often

  • Foster two-way dialogue and trust

Explore more:

At Bentega, we help growing companies design and communicate On-Target Earnings plans that align performance with results. Our tools make it easy to structure, simulate, and share OTE in a way that drives clarity and motivates employees at every level.

👉 Learn more at www.bentega.io