Petra Pereira· HR Business Partner, Bellwether Consulting
Asked in Sales Compensation ·
US medical devices company, around 180 sellers. In January we launch a new surgical product through a dedicated team of 20. Marketing's forecast for year one has changed three times since June and the range between the low and high cases is fourfold.
I have to set individual quotas by early December. If I use the high case, most of the team will miss and we will lose people we have just hired. If I use the low case and the product takes off, we will pay out several times target.
How have others set quota in a first year where the forecast is this uncertain?
3 helpful · 1 insightful · 3 replies · 124 views · 6 following
Accepted answer· by Quentin Jimenez
Do not set an annual quota. Set the first half on the low-to-middle case with a team-based measure, then reset for the second half on actual run rate. In a launch year we paid 50% of the incentive on team revenue and 50% on individual milestones such as surgeons trained and accounts through value analysis committee. It bought us six months of real data before anyone had an individual revenue number.
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Senior Compensation Analyst, Calibre Software
Accepted answer
Do not set an annual quota. Set the first half on the low-to-middle case with a team-based measure, then reset for the second half on actual run rate. In a launch year we paid 50% of the incentive on team revenue and 50% on individual milestones such as surgeons trained and accounts through value analysis committee. It bought us six months of real data before anyone had an individual revenue number.
Compensation Analyst, Fairlead Shipping
We used a wide payout band where we would normally use a point target. Threshold at 50% of the middle case, target at 100%, and a flatter curve than usual either side, about 0.6x below and 1.2x above. If the forecast is wrong by a factor of two, pay moves by much less than that. It is duller for the sellers, but in a launch year dull is acceptable.
Nina LarsenGRS
Benefits Manager, Ravenna Chemicals
Whichever you choose, write the reset into the plan document now. We set a launch quota that turned out to be 40% of what the market wanted, and tried to raise it in July with nothing in the plan allowing a mid-year change. The conversation with those 15 sellers was the worst of my career.
