Compensation

Quota design worksheet

The annual quota-setting exercise reduced to its components. Run top-down and bottom-up separately; document the gap; reconcile. Shipping the worksheet to the team along with the resulting quota produces meaningfully less push-back than shipping just the number.

Top-down: from the company target

COMPANY TARGET
Annual revenue target: £___________________
- Renewals expected (existing customer ARR): £___________________
- Expansion expected (upsell + cross-sell): £___________________
NEW BUSINESS REQUIRED: £___________________

QUOTA-CARRYING CAPACITY
Number of fully-ramped AEs: ___________________
Weighted capacity (account for ramp status):
- Year-2+ AEs at 100% capacity: ___ AEs * 1.0 = ___
- Year-1 AEs at 100% capacity:  ___ AEs * 1.0 = ___
- Recently-ramped (months 9-12): ___ AEs * 0.85 = ___
- Mid-ramp (months 4-8):         ___ AEs * 0.6 = ___
- Early-ramp (months 1-3):       ___ AEs * 0.2 = ___
TOTAL WEIGHTED CAPACITY: ___ AEs

PRODUCTIVITY ADJUSTMENT
Top-down quota math should not assume 100% average attainment.
Realistic average attainment in UK SaaS: 60-80%.
Use 70% as the working assumption.

PRODUCTIVITY-ADJUSTED QUOTA PER AE
= New business required / (weighted capacity * 0.70)
= £_______________________

COVERAGE CHECK
What pipeline coverage does this quota imply?
- Realised close rate from qualified pipeline: ___%
- Required coverage = 1 / close-rate = ___x
- Required pipeline per AE per quarter = quota / 4 * coverage = £_______
- Has the team historically generated this volume? Y / N
- If N: the quota is structurally unrealistic; revise either the
  quota OR the capacity (more SDRs, more marketing, more AEs).

Bottom-up: from territory capacity

PER-AE TERRITORY ESTIMATE

For each AE:
- AE name: ________________________________
- Account count in territory: ____________
- Account-size distribution:
  - Tier 1 (highest potential): ___ accounts
  - Tier 2:                     ___ accounts
  - Tier 3:                     ___ accounts
- Historical pipeline generation from this book (last 4 quarters): £___
- Estimated new-business potential year ahead: £___
  - Reasoning: __________________________

TEAM TOTAL FROM BOTTOM-UP
Sum of per-AE bottom-up estimates: £___________________

ADJUSTMENT FOR FIELD UNDER-ESTIMATION
Field teams systematically under-estimate to set up over-attainment.
Adjustment factor: typically 1.10-1.20.
Adjusted bottom-up: £___________________

Reconciliation

THE GAP
Top-down quota per AE: £___________________
Bottom-up quota per AE (adjusted): £___________________
Gap: £___________________

OPTION A: Accept bottom-up. Revise the company target downward.
OPTION B: Accept top-down. Increase capacity (more AEs, more SDRs,
          better tooling, more marketing investment).
OPTION C (usually wrong): Compromise on a middle number with
          adjusted comp plan to make higher attainment unattractive.

DECISION
Selected option: A / B / C
Rationale: ________________________________

QUOTA AGAINST BANDS
Quota / OTE ratio check:
- Mid-market AE (£100k OTE):    quota / £100k = ___x  (band: 4-5x)
- Enterprise AE (£150k OTE):    quota / £150k = ___x  (band: 5-8x)
- SMB AE (£75k OTE):           quota / £75k =  ___x  (band: 3-5x)

Outside the band: closer look needed.

Two patterns that fail

  • Stretch quotas at 90th-percentile attainment. Field stops trying; quota becomes hygiene factor. Don't do this.
  • Mid-year rebase. Erodes trust; next year's quota-setting becomes adversarial. Rebase only with documented exceptional cause.

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