Absolute vs Relative Performance III

Sales rep incomes are tied to goals, budgets, or quotas, creating a degree or accountability for the rep to contribute his or her part of the company's overall objectives.

The distinction between absolute performance is critical when considering sales compensation options.  A sales executive once explained the difference between absolute and relative performance in the context of sales compensation by saying, "On approach is sales rep regulated and the other is management regulated."

The point the executive was making is that relative measurements mean that performance is evaluated relative to management expectations.  Sales rep incomes are tied to goals, budgets, or quotas, creating a degree or accountability for the rep to contribute his or her part of the company's overall objectives.

By saying "rep regulated" the executive was expressing his view that the the only accountability that exists under an absolute program is the amount of income the rep wants to earn.  In other words, the rep is solely accountable to himself or herself and the income the rep wants to make.

ACTION POINT:  Decide how you want to manage performance expectations.