A Watson Wyatt news release said that in the firm’s poll of 186 companies with more than 100,000 sales professionals, 75% of companies have hiked the 2005 performance goals and quotas that sales representatives must achieve to earn a commission or bonus. Some 20% of companies left their quotas unchanged, while only 5% cut them.
Watson Wyatt also found that employers are expanding their sales forces at the highest pace in nearly five years. One in three employer respondents (33%) plan to bring on more sales staff members this year, while 62% say they will maintain their current staffing level. However, 92% of employers said they have had a hard time attracting top sales personnel in 2005, up from 82% in a poll three years ago.
“After several sluggish years, many sales forces are now poised for a period of growth,” said John Bremen, national practice director for sales force compensation at Watson Wyatt, in a news release. “With 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.”
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% in 2005 from just 49% in 2002. Furthermore, the use of performance-based pay for sales support and administrative positions increased 15% over the past three years, according to Watson Wyatt.
“The 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,” said Bremen. “The winners will be those employers that are able to effectively optimize business growth and sales force productivity at the same time.”