Who Should Set Sales Set Quotas?

The traditional quota setting process gives sales management tremendous autonomy in the quota setting process. Once the final sales targets are established by the business planning cycle, they are passed on to the Chief Sales Officer, who then initiates the quota setting process in the sales organization. At that point, other functional areas such as Finance or Human Resources have very little if any involvement.

Slide3The traditional approach is changing. Companies are increasingly concerned about poor quota setting and its widespread impact. They realize that other functional areas can make significant contributions to improve the quota setting process. Indeed, few if any sales organizations have all the talent or time needed to conduct a comprehensive, high quality quota setting process.

Cross functional quota setting teams are increasingly more common. For example, the sales organization contributes expertise on territory assignment and local market dynamics; finance adds expertise in business planning assumptions and forecasting; marketing adds expertise in market potential measurement and external data sources, human resources adds expertise in compensation and sales management training on quota setting, and information technology adds expertise in databases and software.

Slide4aCross functional team success hinges on effective chartering, or establishing clear roles and responsibilities. The four primary roles in a quota setting charter are described in the table.

The team approach to quota setting offers a tremendous leap in sophistication over the traditional quota setting process. The benefits of great quotas include higher sales force utilization, motivation and productivity.