Survey Finds Compensation Plan Complexity is Key Factor in Poor Sales Force Performance:...

Survey Finds Compensation Plan Complexity is Key Factor in Poor Sales Force
Performance: Deloitte/Oracle Survey
'SPOT' Checking Offers Beacon of Hope

NEW YORK, July 7 /PRNewswire-FirstCall/ -- Poor performance and complex
compensation plans threaten the financial success of sales organizations
despite recent improvement efforts, according to a new compensation survey of
sales force leaders conducted by Deloitte and Oracle.
More than 40 percent of the 185 respondents reported that their sales
forces did not meet last year's sales goals, according to the "2008 Strategic
Sales Compensation Survey." And less than half (49 percent) of this year's
respondents are "satisfied" or "very satisfied" with their sales force
performance, a decline from 56 percent in 2006.
"It's a challenging economic market and sales force effectiveness can make
or break a company's financial results," said Michael Herman, national leader
for Deloitte's Sales Force Effectiveness service offering. "Companies can't
afford to have a sub par sales force and, while we believe sales compensation
plans are a key driver to boosting overall sales performance, plans are
sinking into a deeper state of complexity."
Less than half -- 41 percent -- of sales leaders are satisfied with their
sales compensation program, a sharp drop from 59 percent in 2006. In
addition, less than half of the respondents (46 percent) believe their sales
compensation plan is sufficiently driving the right selling behaviors --
complexity may be a reason why.
Moving Toward Complexity
Almost half of the survey respondents (46 percent) believe sales force
compensation plans became more complex since 2006. Complexity drivers cited
include more sales representatives in multiple countries, increased team
selling, more complicated quotas and territory assignments and the demand for
more precise metrics.
For instance, 52 percent of respondents already have sales representatives
in several countries. Fifteen percent have sales reps in six to 20 countries
and 10 percent have reps in more than 20 countries. With more sales reps
outside the home country, respondents reported that 57 percent of their sales
strategies and plans have to be customized to local conditions, which adds to
the administrative burden on a sales organization.
"Globalization is a key revenue driver for many companies, but that growth
comes at a price if the sales force is managed ineffectively and is encumbered
by administrative woes," cautioned Gretchen Alarcon, vice president of HCM
Strategy at Oracle. "Sales force leadership must tackle the inevitable
challenges that come with global growth and changing market conditions by
partnering with such business units as human resources, technology and finance
and finding ways to simplify their programs."
A Few Steps Forward
The survey revealed that many companies have taken some steps to make
their sales operations more effective. Almost three-quarters (73 percent) are
using three or fewer measures of sales performance. Seventy-seven percent
conduct a plan review at least annually. Fifty-eight percent also report they
are changing plan metrics less frequently than before.
"Companies certainly have taken some steps to address what we call 'the
simplicity paradox' of sales compensation since 2006, but there's more to do,"
commented Michael Vaccaro, a member of Deloitte's Sales Force Effectiveness
leadership team.
Deloitte's "SPOT" check methodology, which focuses on strategy, processes,
organizational structure and technology, can help organizations in their
efforts to improve their sales operations. SPOT is defined as follows:
-- What is the Strategy for the plan design's metrics and mechanics?
-- What Processes are used to administer the sales compensation plan?
-- How is the company Organized to support the sales compensation plan?
-- How is the Technology infrastructure deployed to support sales plan
administration?
A more detailed explanation of the "SPOT" framework and additional
findings of the survey can be found in the full report at
www.deloitte.com/us/2008SalesCompSurvey or by contacting bjosey@deloitte.com.
About the Survey
The survey included 185 respondents from companies across a wide range of
industries. Forty-six percent of respondents work for companies with annual
revenues at or greater than $100 million, while 54 percent work for companies
with annual revenues under $100 million.
About Oracle
Oracle (Nasdaq: ORCL) is the world's largest enterprise software company.
For more information about Oracle, please visit our Web site at
http://www.oracle.com.
About Deloitte
As used in this document, "Deloitte" means Deloitte LLP and its
subsidiaries. Please see www.deloitte.com/about for a detailed description of
the legal structure of Deloitte LLP and its subsidiaries.
Contact: Britton Josey Carol Sato
Public Relations Public Relations
Deloitte Oracle
(404) 220-1334 650-633-5551
bjosey@deloitte.com carol.sato@oracle.com

SOURCE Deloitte and Oracle

Britton Josey, Public Relations, Deloitte, +1-404-220-1334,
bjosey@deloitte.com; Carol Sato, Public Relations, Oracle, +1-650-633-5551,
carol.sato@oracle.com