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A majority of organizations struggle with setting fair and accurate sales quotas that provide effective incentives for their salesforce, according to research by WorldatWork, an association of total rewards professionals.
Accurate quota setting was a major incentive compensation issue cited in the association's
2012 Sales Compensation Practices Survey for the High-Tech Industry report, based on a survey fielded among compensation managers at U.S.-based high-tech companies from February through March 2012. The findings were consistent with earlier cross-industry research, including the association's 2010
Sales Compensation Programs and Practices survey report.
“The biggest challenge in quota setting is finding the right balance," said Jim Stoeckmann, CSCP, a practice leader for WorldatWork. “Setting quotas too high can give organizations the illusion that they’re closer to making their revenue goals, yet it may frustrate a salesforce that sees the quota as unachievable. Setting them too low will negatively impact revenue and result in underperforming sales teams."
Sales Quota Issues and Practices
The 2012 survey among high-tech companies found that:
Designing Compensation Systems for Sales Professionals, SHRM Templates and Tools, December 2011
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