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Takeaways:
I wish I had learned about over-assignment early in my CEO career. Over-assignment refers to the difference between the street quota, set for each individual sales rep, and the quota assigned to the manager of those sales reps. This concept applies to every level of the sales hierarchy, providing a buffer between frontline sales managers and directors, directors and VPs, and VPs up to the top of the sales chain. The range of over-assignment is broad, varying from 0% to 50%, with no set rule of thumb. However, an over-assignment of 50% should raise concerns about the necessity for such a large buffer.
At PlanGrid, there was a 40% over-assignment between the CRO and rep levels from 2014 to 2016, meaning we assigned an extra 40% of rep quota compared to the company target. Although we achieved our goal of triple-digit growth in those years, without a reliable marketing engine, we couldn’t create the pipeline required to enable every sales rep to reach their target, resulting in high turnover among reps.
There are nuances, such as entering a new market where over-assignment provides more flexibility, but relying solely on brute force over-assignment, as we did, is an expensive insurance policy and should not be part of any long-term strategy. Below are three types of over-assignment and some trade-offs to consider.
No over-assignment
In a scenario without over-assignment, there's little or no buffer between sales reps, their managers, and the levels above. The team must perform perfectly, and everyone must meet their targets for the company to reach its overall revenue goal. This approach means the company's target relies directly on its ability to hire, train, retain, and make the entire sales team productive — leaving no room for error. It also signals leadership’s confidence that every rep can and should reach their target if they do their job. If targets aren't met, the first to be let go would arguably be the managers who didn't hire or train quickly enough or made poor hiring decisions.
No over-assignment can put stress on the organization because any rep leaving (voluntarily or involuntarily, or going on leave or sabbatical) means someone else needs to overachieve and make up the difference to reach the company's target.
Ultimately, the lack of over-assignment can signal that the company doesn’t rely on its reps to hit the overall goal (such as in a heavy channel sales business) or expects every manager to deliver results. If the managers don’t perform, the company is prepared to dismiss them, whether involuntarily or voluntarily, since they won't make their commission and on-target earnings, and the grass will seem greener at another company.
Low over-assignment
Lower over-assignment means a single-digit buffer from the sales reps' assigned quotas to the CRO’s quota and the company's target. The team must still operate flawlessly, and everyone must meet their targets for the entire company to achieve its goals. However, it allows for some breathing room with delays in hiring, onboarding, or closing deals. This should be the best practice for most companies as it provides a buffer while ensuring managers are not rewarded when their whole team is not performing.
High over-assignment
For companies with low sales productivity or those that can't accurately forecast sales or build a pipeline, it may be tempting to over-assign at every level to allow for mistakes and unforeseen conditions. High over-assignment provides a cushion for the sales team against market volatility or unexpected challenges. When a company enters an emerging market or vertical and has no data points on its ability to sell into the region, it might want to de-risk by over-assigning in that industry or geographic segment.
From a cost perspective, it is highly inefficient to hire more reps than needed to reach a given target, or to overpay managers and executives by setting an overly conservative high-level target.
The biggest cultural risk with over-assignment, however, is that it's entirely possible for all managers to meet their targets while none of the sales reps do. This results in managers making money while reps don't, which will likely lead to high turnover in the front-line sales team. It rewards mediocre management and encourages reps to leave the company or pursue management roles, even if they’re the wrong fit, to earn better income.
Conclusion
It's important to recognize that no one likes achieving only 70% of their target, no matter what that target is. No one wakes up wanting to do a C-minus job. So, when setting an over-assignment, consider asking, "How can we best challenge the sales team, managers, and leaders without discouraging them?" Another helpful question is, "Who do we value more: the reps, managers, or leaders?" The answer to this question is reflected in the over-assignment of quotas at each level.
Transparency is key. Once Revenue Operations, Finance, and Sales leadership agree on an over-assignment strategy, it’s important to bring managers into the conversation so they feel buy-in and can create their path to plan for their reps and themselves.
Tracy Young, the co-founder and CEO of TigerEye and former leader of PlanGrid, has a proven track record in scaling tech enterprises, notably leading PlanGrid to a $875 million acquisition by Autodesk in 2018. She is recognized in Forbes’ Top 50 Women in Tech, has spoken at prestigious events like TEDWomen 2020, and holds a B.S. in construction engineering management.
