Designing Variable Compensation For the WHOLE Team with Michaela Downs

On this episode of the HabitStack Podcast, host Scott Ward talks with Michaela Downs, a fractional revenue operations leader who has built comp systems from scratch at multiple startups. Michaela argues that comp plans only work when targets are set with real bottoms up analysis, not board pressure or arbitrary growth percentages. She breaks down how to extend variable compensation beyond sales, including small flat bonuses tied to company wide MBOs like shipping a product or hitting a profitability milestone. Michaela explains why founders often mistakenly trade equity for commission with early sales hires, undervaluing the risk those reps take on. She also covers why shorter bonus cycles, quarterly or half year rather than annual, improve both accuracy and motivation, and how to keep bonuses meaningful instead of becoming an expected part of pay. The conversation closes with a look at why marketing rarely shares in variable comp despite its role in pipeline, and what founders can do to align sales and marketing around one shared number instead of competing targets.