Human Capital & Careers

Dearth of a Salesman?

Many corporate managers say luring and holding on to key salespeople is as tough as it was during the boom.
Stephen TaubJune 20, 2002

The unemployment rate is rising and more and more workers are having difficulty finding jobs.

Nevertheless, in a new survey released by Watson Wyatt Worldwide, many corporate managers say they are having as much difficulty attracting and retaining key salespeople as they did when the economy was thriving.

“The war for talented sales reps and managers is far from over,” says John Bremen, a compensation consultant with Watson Wyatt and author of the study. “In fact, a vast majority of the companies we surveyed have been making broad-based changes to their sales compensation programs in an effort to hire talented salespeople or keep them from leaving.”

Just under half of the 255 employers surveyed revised their sales goals or quotas at mid-year in light of the changing economy. Among those, 75 percent lowered sales goals and quotas.

However, 86 percent of the respondents expect this year’s goals to be about the same or higher.

Which companies reduced their quotas? Thirty-nine percent of companies with increased performance, 88 percent of companies with decreased performance, and 76 percent of companies with no change in performance.

“Clearly, weaker-performing companies are adjusting quotas downward in an effort to keep their salespeople whole, while high-performing companies are expecting more performance from their sales force for the same amount or less pay,” says Bremen.

Given recent economic reports, it’s no surprise that half of the respondents said their sales force’s performance (relative to plan) decreased last year. One-fourth reported that performance (relative to plan) actually improved.

In addition, the vast majority of respondents said they continue to use some sort of variable performance-based pay among sales forces. Indeed, nine out of ten companies in the survey offer some form of performance-based for sales positions.

What’s more, 87 percent of respondents reported no change or, in some cases, an increase in the importance of offering stock-based compensation to sales forces.

In a related story: on Wednesday celebrated mutual fund manager Bill Miller, whose Legg Mason Value Trust is the only mutual fund to beat the S&P 500 for 11 straight years, called for the total elimination of employee stock options as a way of improving investor trust.

“I support the banning of stock options because anything that can be accomplished with options can be accomplished by giving stock directly,” Miller told Bloomberg in an interview. “And it has none of the downsides of options.”