Sales reps facing higher quotas and performance goals

WASHINGTON ñ In an effort to boost sales force productivity, U.S. employers are raising the bar when it comes to performance goals and quotas, according to a new survey by Watson Wyatt, a leading human capital consulting firm. At the same time, a growing number of employers are pushing performance-based pay programs deeper into their sales organizations.

According to Watson Wyattís survey of 186 companies with more than 100,000 sales professionals, 75 percent of companies have increased the 2005 performance goals and quotas that sales representatives must achieve to earn a commission or bonus. Twenty percent of companies left their quotas unchanged, while only 5 percent decreased them.

Watson Wyatt also found that employers are expanding their sales forces at the highest pace in nearly five years. One of three employers (33 percent) plan to increase the number of sales team staff in 2005, while 62 percent say they will maintain their current staffing level. Meanwhile, the percentage of companies that reported difficulty in attracting key sales force talent increased from 82 percent in 2002 to 92 percent in 2005.

ìAfter several sluggish years, many sales forces are now poised for a period of growth,î said John Bremen, national practice director for sales force compensation at Watson Wyatt. ìWith this growth, however, managers are seeking to drive their sales reps to higher productivity levels by ensuring that their pay is tied to their individual performance. In essence, employers are seeking to grow revenues by increasing both sales force size and sales force productivity.î

The survey also found that more companies are using performance-based variable pay programs to compensate a larger share of their sales forces. The number of employers that are now using variable pay programs among their lowest paid sales representatives soared to 92 percent in 2005 from just 49 percent in 2002. Furthermore, the use of performance-based pay for sales support and administrative positions increased 15 percentage points over the past three years.

ìThe emphasis on variable pay programs as a way to motivate and compensate workers while keeping fixed costs under control will help companies position themselves for growth,î said Bremen. ìThe winners will be those employers that are able to effectively optimize business growth and sales force productivity at the same time.î

Distributed by HR Marketer.com