Management must make certain those sales personnel understand quotas and the quota-setting procedure. Convening this understanding is a critical step in securing staff acceptance of quotas. If sales personnel do not understand the procedure used in establishing quotas, they may suspect, for example, that the quotas are a technique to obtain extra effort from them at no cost to the company. This attitude destroys the quota’s effectiveness as an incentive. It is important that sales personnel understand the significance of quotas as communicators of “how much for what period,” but, if they also understand the quota-setting procedure, they ‘are more likely to consider their quotas accurate, fair, and attainable. The quota setting method should be simple enough for sales personnel to understand, yet sufficiently sophisticated to permit acceptable accuracy.
Sometimes, this means that management, faced with choosing between two quota-setting procedures, may choose the less sophisticated because it can be more easily explained to, and understood by, the sales staff. More sophisticated procedures should not be ruled out, but managements using them must explain them to the sales force.
Participation by sales personnel in quota setting:
If sales personnel participate quota setting, the task of explaining quotas and how they are determined is simplified. With sales personnel helping to set their own quotas, management has more assurance that the procedure will be understood. How much staff participation is solicited depends upon management philosophy, types of quotas, information available, sophistication of the quota-setting procedure, and the caliber of the sales force. It is not advisable to turn the whole quota-setting job over to the sales staff, but some sales force participation can obtain more accurate and realistic quotas. Sales personnel have some information about their territories that management does not have, and it can contribute to quota accuracy. Furthermore, when sales personnel participate in quota setting, they are more easily convinced of the fairness of quotas.
Keeping sales personnel informed: Effective sales management keeps sales personnel informed of their progress relative to quotas. Sales personnel receive frequent reports detailing their performance to date. This permits them to analyze their own strong and weak points and take corrective action. Of course, sales personnel need encouragement, advice, and occasionally, warnings, in deciding to take measures to improve their performance. Reaping full benefits from keeping sales personnel informed requires frequent personal contacts by supervisors, as well as regular reports.
Need for continuous managerial control: In administering any quota system, there is a need for continuous monitoring of performance. Arrangements must be made to gather and analyze performance statistics with minimum delay. Charts recording each salesperson’s performance against quota on a monthly, or even weekly, basis facilitate this analysis. Figure 22.1 is a typical chart for comparing sales quotas with actual performances. Not all sales executives agree that charts should be posted for all to see, but most provide each person with information on his or her performance. Keeping sales person- nel informed at frequent intervals, at least monthly, requires subdividing the year. Generally, the annual quota is divided by the number of reporting periods, but, of course, this can be misleading, when random fluctuations in sales occur. For products with seasonal sales patterns it is more logical to apportion annual quotas relative to either the proportion of sales made in each reporting period during the previous year, or the proportions made in “normal” years.
Functioning quota systems can almost always be improved. An alert management continually appraises operation of the system and makes needed changes. Continuous managerial review and appraisal are required, since, for example, a quota that was accurate, fair, and attainable at the beginning of an operating period can prove totally unrealistic in view of changing selling conditions. Flexibility in administering the system is important- if a quota is proving unrealistic, it should be adjusted. Administrative flexibility is desirable, but not too much. Small changes can be ignored; important changes call for adjustments. One company, for instance, adjusts dollar quotas in the event of a significant price change, or any change of 5 percent or more in their industry forecasts. Balance is needed between flexibility to every slight change and inflexibility regardless of changes.
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