Commission correction is an adjustment to a salesperson's previously calculated commission. Corrections occur when the original calculation was incorrect due to data errors, changes to deals, customer changes, or incorrect policy application. According to WorldatWork (2024), 78% of companies experience at least one commission correction per month, and manual processes have a 3-8% error rate.
Common reasons for corrections:
According to Gartner (2024), automated commission systems reduce correction needs by 67%.
| Type | Description | Effect |
|---|---|---|
| Positive adjustment | Additional commission owed | Added to next payout |
| Negative adjustment | Commission should be reduced | Deducted from future |
| Clawback | Full reversal | Full deduction |
| True-up | Reconciliation of estimate vs. actual | Varies |
| Rate correction | Wrong commission rate applied | Recalculated difference |
Original deal booked at $90,000, later reduced to $72,000:
| Calculation | Amount |
|---|---|
| Original commission (10%) | $9,000 |
| Correct commission (10%) | $7,200 |
| Correction | -$1,800 |
Rep was in accelerator tier but paid at base rate:
| Calculation | Amount |
|---|---|
| Paid at base rate (10%) | $4,500 |
| Correct accelerator rate (15%) | $6,750 |
| Correction | +$2,250 |
Customer churns in month 3, full clawback policy:
| Event | Amount |
|---|---|
| Original commission paid | $10,800 |
| Clawback (100%) | -$10,800 |
| Net commission | $0 |
Document everything: Record reason, original value, corrected value, and approval for each adjustment.
Communicate proactively: Notify reps about corrections before they see them on their statement. Surprises create distrust.
Set reasonable time limits: Define how far back corrections can be made. Most companies limit to 90-180 days.
Track correction rates: Monitor what percentage of commissions require corrections. High rates indicate process problems.
| Issue | Consequence | Solution |
|---|---|---|
| No documentation | Disputes, audit failures | Require reason codes and approval |
| Delayed corrections | Large unexpected deductions | Process monthly |
| No communication | Rep distrust | Notify before applying |
| Inconsistent treatment | Perceived favoritism | Standard policies for all |
| High correction rates | Admin burden, frustration | Fix root cause |
Improve data quality: Most corrections stem from bad data. Invest in CRM hygiene and validation rules.
Clarify policies: Ambiguous policies lead to corrections when interpretations differ. Document edge cases explicitly.
Validate before payout: Build verification steps before commissions are finalized. Catch errors before they become corrections.
Automate calculations: Manual calculations have higher error rates. Automated systems reduce correction needs.
Most companies set limits at 90-180 days. Longer periods create uncertainty for reps. Shorter periods force faster error discovery.
Typically small adjustments only need sales manager approval, while larger amounts require finance approval. Define thresholds in your policy.
Be direct and timely. Explain the reason clearly, show the calculation, and provide opportunity for questions. Surprises on the commission statement create distrust.
Commission corrections drain time and create frustration. Prowi's automated calculations, real-time validation, and CRM integration dramatically reduce error rates—so corrections become the exception, not the norm.