Sales Firms Glum about Productivity, Comp Plans

June 14, 2005 (PLANSPONSOR.com) - A new Deloitte Consulting survey found a significant level of discontent among sales firms with their sales compensation program even though nearly all had tinkered with it over the last 24 months.

A Deloitte news release said that two-thirds of companies surveyed are not currently satisfied with their sales compensation program, up from 56% last year.

Sixty percent of respondents admit they are dissatisfied with the productivity of their sales force, with almost half reporting that their sales force did not meet goals, the survey found. More than one-half of respondents say their plan does not appropriately differentiate between top and average performers, compared to only 36% last year.

“If sales leaders are dissatisfied with the effectiveness of a program or the productivity of their sales force, they lack a critical tool to drive sales and income,” asserted Michael Herman, a principal at Deloitte Consulting, in the news release. “The challenge most companies face is being able to find the balance between designing an effective sales compensation program that reflects an increasingly complex sales environment while keeping the program both simple and dedicated to true performance.”

According to the survey, respondents reported making the following organizational and design changes within the past two years:

  • 87% changed performance metrics
  • 87% changed calculation/formula for payout
  • 87% changed quota/goal setting
  • 79% changed total cash compensation
  • 69% changed the size of their sales organization
  • 66% changed their reporting structure

For example, approximately 77% of respondents admit the administration of their sales compensation program is a challenge. More than one-third state their sales compensation program has increased in complexity over the years.

The survey is available here .

The survey included responses from 67 companies across a wide range of industries. Thirty-seven percent of respondents work for companies with annual revenues greater than $100 million, while 63% work for companies with annual revenues under $100 million.

«