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This report includes a summary of key changes, including the salary level test and salary basis test.

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June 21, 2002
Finding, Keeping Top Sales Talent is Still a Challenge
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pite higher unemployment, companies are having as much difficulty attracting and retaining key salespeople as they did when the economy was thriving, according to a recent survey by the consultant Watson Wyatt Worldwide.

"The war for talented sales reps and managers is far from over. In fact, a vast majority of the companies we surveyed have been making broad-based changes to their sales compensation programs in an effort to hire talented salespeople or keep them from leaving," said John Bremen, a compensation consultant with Watson Wyatt and the study's author.

Just under half of the 255 employers surveyed revised their sales goals or quotas at mid-year in light of the changing economy, Watson Wyatt reports.

Among those, three-fourths lowered sales goals and quotas. The study noted that a large majority of respondents - 86 percent - expect this year's goals to be about the same or higher.

"Clearly, weaker-performing companies are adjusting quotas downward in an effort to keep their salespeople whole, while high-performing companies are expecting more performance from their sales force for the same amount or less pay," said Bremen. "Given recent economic reports, it is no surprise that half of the companies said their sales force's performance relative to plan decreased last year, although one fourth also reported that performance relative to plan increased."

The survey also found that the use of variable performance-based pay among sales forces continues to rise with nine out of ten companies offering some form to sales positions. Furthermore, despite the fluctuating stock market over the past year, 87 percent of respondents reported no change or, in some cases, an increase in the importance of offering stock-based compensation to sales forces.

"While the economic slowdown temporarily changed the competitive talent landscape, turnover of key talent hasn't really slowed," said Bremen. "Companies are as relentless as ever in designing compensation plans that enable them to motivate their salespeople to reach increasingly tougher goals."

To order a copy of the report, "Sales Force Compensation and Management: Driving the Top Line in Changing Times," go to
http://www.watsonwyatt.com/research/reports.asp.
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