I'm wearing my heart on my sleeve:I am a big fan of the practice of over-assigning sales quotas as part of a company’s annual planning process. Its a practice that provides reasonable breathing room for people at all levels in the company, and protects sales management from its own aggressiveness and over-optimism.
To refresh everyones memory, over-assigning quotas means this: At a given level in the sales organization, the sum of the sales quotas of the sales reps (or managers) at that level is greater than the sum of the quotas of the sales manager(s) one level up.In larger companies, using the practice at multiple levels of sales management means that the difference between the sum of the quotas of the individual contributor sales reps and the corporate sales target can provide a pretty large cushion.
As someone who has spent many years in the CFOs chair, I like the practice because life tends to deal out more unpleasant surprises than pleasant ones. Yes, every so often somebody hits the jackpot, but lets face it: theres a reason why casinos are so profitable. And over-assigned quotas provide a win/win situation for people throughout the organization:
- Senior management and the board appreciate the increased certainty that the company will achieve its top-level goals, which may be well worth the cost of a few extra sales reps.
- Sales managers appreciate the cushion in case new-hire sales reps don’t ramp up to full speed as quickly as hoped, or if unplanned turnover requires hiring new sales reps, who usually start at the bottom of the learning curve.
- Sales reps, not to mention the finance staff, appreciate the fact that the cushion reduces the pressure to perform unnatural acts like granting excessive discounts, or calling in favors, or worse in specific customer situations.
But I conclude with a warning: Don’t ever create an over-assigned situation simply by raising the quotas at lower levels in the organization. That just doesn’t work. Its destructive to morale and trust when you ask people to do more work for the same amount of pay, they feel like they’ve gotten a pay cut. And if you fix that perception by also raising the target commissions at 100% of quota, you’ve lost some of the savings from keeping sales headcount down.
Moreover, its just not realistic to think that you can get a seasoned sales and sales management team to sell more just by telling them to sell more. Generally, that only works if the quotas were too low to begin with, and if that was the case, you have a different management problem.