Is Your Quota Setting Process for New Hires Realistic?

April 23, 2012 at 7:00 AM

Sales Compensation   New Hire Ramp Time resized 600Are you a sales leader who thinks you are one ‘A’ player hire away from hitting your sales quota this year? If you manage a typical sales force, less than half of your reps will hit quota this year. Do you know which half? Are you frantically hiring more people to try and meet quota? Hoping that a new superstar rep will achieve 100% of a tenured rep’s quota with only 8 months left in the year? Is your quota setting process for new hires realistic?

The average time it takes a new hire to ramp to productivity is about 6 months. At this point in the year, your chance of meeting quota rests squarely on the shoulders of your tenured sales force. It is unrealistic to place heroic expectations on a new hire. They should contribute to your overall sales goal, but not as much as you might think.

Want to improve your quota setting process for new hires?

Start by taking your information and plugging it into this Excel document available for free download here.
quota setting sales rep
Here’s what it will tell you:

1. Based on hire date and ramp-to-productivity, how much a new hire will realistically produce in 2012

2. What incentive compensation you will pay for their performance

3. How much it will cost you as a percent of revenue

4. How much of your total quota will be met by your new hires

5. What their sales quota should be based on hire date

Here’s what you need to complete the assessment:

1. Base and variable compensation

2. Average transaction size

3. Annual quota for a fully producing (ramped) sales rep

4. The average productivity (% to quota) by month of a new hire

5. How many new reps you’ve hired each month this year

We often see confusion in sales organizations about what a new hire can realistically contribute to overall sales quota. This tool provides you with an objective way to determine what your new hires can contribute to the revenue goal this year. Before placing unrealistic expectations on your new hires, take an objective look at your quota setting process and set your new hires up for success.

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Ryan Tognazzini

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Topics: Compensation Planning, Quota Setting, Sales Compensation Planning, Sales Compensation

Posted by Ryan Tognazzini

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