With the economy in the current state some companies are looking at changing the Target Total Compensation (TTC). TTC is the amount the company plans to pay the sales rep at 100% performance, precisely making every goal. This is also referred to as On Target Earnings (OTE). Each year I recommend an evaluation of your company TTC compared to your industry and geography. This is valuable information and helps you understand where you are in the marketplace competing for the valuable sales resources you need.

Recently jobs have been either flat or up slightly year over year. This year it appears the TTC is going down for some jobs.

Are you planning on reducing your TTC next year? Reducing TTC is like a pay cut and can have negative effects on the motivation of your sales force. If you reduce the TTC, how will you keep the sales force motivated while taking away real earning capability?

Will you reduce the quotas or goals to reflect the reality of the economy? Remember when developing a good sales compensation plan you want a team of winners, so the goals may need to be adjusted downward so that even in this economy at least 50% of your reps are at quota or above.

Have you thought about increasing the upside, handsomely rewarding the reps who exceed their quota in this economy? An enhanced upside potential may be just what you need to soften the blow of lower TTC.

Teanna Spence
Compensation Director
Makana Solutions