Absolute vs Relative Performance V

...sales representatives see the incorporation of hitting management-established goals as a logical evolution to their pay program. 

Most sales reps are astute when it comes to dissecting a sales compensation program.  The first question most reps will ask when relative performance metrics are introduced is: "How will the goals be set?"  We have been part of successfully implementing relative performance metrics into sales compensation programs that were previously based on absolute measures many times.  In these instances, success was due in part to accountability within the sales organization.  Sales representative may not have been paid on achieving objectives such as monthly or quarterly sales goal, but the goal was important to them because their manager made it so.

In these situations, sales representatives see the incorporation of hitting management-established goals as a logical evolution to their pay program.  On the other hand, there are companies in which an almost irrational fear of the sales force exists.  In these companies, the view is that the sales force will leave the company en masse if their pay program were to change to a system that links any portion of their pay to achieving objectives.

Some questions to consider in order to get a sense of how well relative performance metrics would work based on the degree of accountability in your organization are:

• Do goals exist for sales reps today?
• If goals exist, do sales reps pay attention to them?
• Does a sales manager regularly meet with sales representatives to review performance?
• Does the company have a history of success when emphasis is placed on short-term objectives-for example, product promotion?
• Are sales reps special deals mostly absent?

ACTION POINT: If most of the answers to the questions are "no," an absolute approach will be less disruptive and easier to implement.