Imagine this: You are the leader of a new multinational sales team. The Regional Headquarters freezes budgets, and then it flows down to you. The fiscal quarters of your organization are not mapped one to one with the country’s financial structure. However, quarterly linearity is determined at HQ. Sales teams have a substantial variable component to their compensation plan. They are expected to plan maturely to maximize their sales achievements to maximize their salary. Yet, they cannot predict below a quarterly budget. Sounds familiar? This sounds familiar?
You are now in the real world. Negotiation is done with one leg tied to the management pole and the other swinging to the headwinds of employee motivation and retention. This is the definition of elasticity of balance – one degree of freedom per hand or half thereof.
Since it only moves up? It is unlimited for the other.
This is where your leadership skills are most important. Whether you’re Authoritative, Participative, or Delegative in your role, the quota setting process for sales reps will test your ability and teamwork. Here are five steps to ensure that your employees are happy.
1. Get sales to buy
In the early part of the year, you should reinforce the expected growth rates for next year and establish a goal for a rolling pipeline. The growth rates must be dependent on multiple macroeconomic parameters, such as GDP growth, sectoral investments, market maturity, and not just the visible pipe.
2. Get your market information correct.
To help you determine the best growth, give the manager your most detailed analysis of the sales figures of competitors, sales teams, market size (from estimates primary and secondary), SWOT data, historical analysis on average deal sizes, and what it takes to increase quarterly transaction volumes. Although you may be compelled to accept a larger budget, at least you tried to make realistic forecasts.
3. To fit a curve.
Do not apply uniform growth rates for all members of the team. Star performers will not hesitate to accept a higher level of growth. Offer to increase your accelerator earnings if your company allows flexibility in the variable pay mix for more excellent performance.
4. Get rid of the suckers.
No matter how lucky you are, there will always be loud cribbers on the team who disagree with your reasons. Help them with possible re-alignments of products, territories, or sectors this year. If they are still not happy, you can get them out-placed. It is essential to keep your team’s star performers humming. This is the only way you can build a team that gives more than expected growth year after année.
It is tempting to create a large buffer between the budget and the field, but it is not advisable. A minimal pillow is okay in certain situations, but it’s a sign of leadership and confidence that you can manage a team to deliver.
Budget for each rep. Transparency is essential to the foundation of a stellar sales team. Happy goal setting!