How Resource Quotas Work with Incentive Compensation

Compensation plans control how an employee is paid. Salespeople often get paid according to their performance.

One tool used to measure performance is the establishment of a sales quota for the salesperson and then the comparison of actual sales for a time period with the salesperson's quota for that time period. The quota manager notifies the compensation analyst any time quota is published or changed.

This figure shows the sales manager publishing territory resource quotas. The publication sends a notification to the incentive compensation analyst.

Quota Changes

At the beginning of the year, sales management update their territory definitions and assign salespeople to territories. Senior managers assign quotas to their territories and child territories. The owners of those territories in turn assign quotas to the owners and resources of their child territories. When a manager publishes quotas, the quotas become available to the owners of the child territories. Also, a notification goes to the compensation analyst with the now published quota information.

During a quota plan period, changes occur in territory definitions, resource assignment to territories, and to quota assignments to resources (salespeople). Managers can choose to submit updated quota information to the compensation analyst in the form of a notification.

Sales Goals

A sales goal determines how quota is measured and defines what you want to measure. The sales goal used for a territory owner's revenue quotas is the Revenue Sales Goal. In order to assign multiple quotas to an individual salesperson or to assign quotas to salespeople other than territory owners, you must use a sales goal other than the Revenue Sales Goal. These are examples of sales goal definitions:

• Number of customer visits

• Number of service contracts sold

Notifications to compensation include quotas for each quota-carrying resource for all sales goals. For each salesperson, the notification contains all the annual resource quotas for all applicable goals as well as the period quotas.

Compensation Plan Updates

The compensation analyst creates compensation plans for a specific time period. The analyst uses quota notifications to keep the quota information in the plan correct and up to date. The analyst analyzes the provided information, performs any other research needed, and manually updates the quota plan or rejects the notification. The compensation plan quota status is set to complete when the compensation analyst completes updating the compensation plan.