The Challenges of Product Manager Incentive Compensation

Successful product manager incentive compensation plans are very challenging to design and implement. Bonuses, or other forms of incentive compensation, are intended to motivate individuals and organizations to achieve key goals and objectives. Incentive compensation plans are one of the ways that enterprises express their value and priorities. Regrettably, most product manager incentive compensation plans fail to do that. Bonuses tend to fall into the category of ‘it’s nice to have’ but they rarely inspire product managers to perform at the highest levels. This post reviews product manager compensation basics, alignment, and suggested best practices.

Product Manager Incentive Compensation Basics

An annual survey from the Pragmatic Institute does a good job of painting a picture of product manager compensation:

• 81% of Product Managers Eligible for Bonus
• Average Annual Base Salary: $105,400
• Average Bonus: $14,800 (14% of base salary)
• Factors for Calculating Bonus (% Bonus Eligible PMs Reporting)
  -89% Company Revenue/Profit
  -61% Personal Objectives
  -34% Product Revenue/Profit
  -5% Market Visits
  -9% Other