Monday, September 14, 2009

Optimistic Forecasts for 2010 Drive Sales Force Staffing, Compensation Design

Corporate sales forces are anticipating better times ahead, as companies project higher revenues and sales goals for next year, according to a survey by Watson Wyatt, a global consulting firm. Additionally, the number of employers planning further sales force layoffs has declined sharply as the economy shows signs of improvement.

The survey found that the vast majority (83 percent) of companies project revenue growth in 2010, with 43 percent expecting revenues to increase by 6 percent or more. Also, slightly more than half (51 percent) expect higher sales goals and quotas for next year. Only 12 percent anticipate decreasing their sales staffing levels in the upcoming fiscal year (compared with 53 percent in February), and 16 percent actually anticipate increasing their sales force head count. Voluntary sales force turnover fell in 2009; 81 percent of respondents report less than 10 percent voluntary turnover, compared with 51 percent in February. Watson Wyatt’s survey was conducted in August 2009 and includes responses from sales executives at 129 large companies.

However, 60 percent think that sales force productivity and efficiency remains a significant concern, while 48 percent believe that sales force quota and goal setting is a concern. About one third (35 percent) also are concerned about sales force morale and motivation, while 40 percent are concerned with coaching and development. Less than half (47 percent) report being satisfied or very satisfied with their goal-setting processes.

Alterations companies plan to make to their sales incentive plans in the next fiscal year include changing performance measures (60 percent), changing performance measure weightings (50 percent) and changing incentive formulae or mechanics (49 percent). Twenty-eight percent also expect to change their pay mix.

Even in the current economy, the large majority of companies (86 percent) are able to identify their top performers, and 79 percent report that the top earners mirror the top performers, indicating a strong pay-for-performance orientation.

Other findings include:

*The look backwards reflects a difficult 2009. Compared to this time last year, 34 percent have decreased sales force goals and quotas. Despite this, 57 percent still reported decreased sales force performance relative to plan.

*Nearly two-thirds of companies (65 percent) are managing their compensation cost of sales to below 4 percent of total sales.

*Companies continue to manage sales compensation on a global basis with local customization. For the 64 percent of companies that have sales incentive plans in other countries, most determine program eligibility (59 percent) and design (60 percent) globally, but pay levels (79 percent), sales goals (73 percent) and pay mix (68 percent) on a local basis.

*Almost half (46 percent) offer stock-based compensation to their sales forces.

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