Companies See Fewer Sales Force Reductions in 2009, Watson Wyatt Survey Finds

Other Cost-Cutting Measures to Ease as Companies Look to Grow Revenue 


WASHINGTON, April 9  /PRNewswire-FirstCall/ -- The number of employers planning to reduce their sales forces or use other short-term cost-cutting measures over the next several months is expected to decline, according to a survey by Watson Wyatt (NYSE:WWNASDAQ:WW), a leading global consulting firm. Instead, employers will be looking at ways to manage costs, grow revenues and position themselves for when the economy recovers.

The Watson Wyatt survey, conducted in February 2009, found that only two of 10 companies (21 percent) plan to reduce sales headcount this year, a sharp decline from the 53 percent that did so done so earlier this winter. Additionally, just two of 10 of companies plan to introduce or expand special incentives (SPIFFs) or contests to energize sales, compared with 42 percent previously. The survey also found a similar decline in the number of employers planning to lower sales goals and quotas, or modify sales professionals' territories. The survey was based on responses from sales and HR executives at 91 large U.S. companies.

"This economic downturn has taken its toll on most sales forces," said John Bremen, global director of sales effectiveness and compensation consulting at Watson Wyatt. "In preparation for the economy's eventual recovery, companies are winding down their short-term cost control initiatives. Instead, they are beginning to focus on sales productivity and growth."

The survey found that the recession is providing most companies with a reprieve from the pressures of attracting and retaining sales professionals. Only 20 percent of companies reported having greater difficulty attracting or retaining sales professionals this year compared with 2008.

However, even with a somewhat frozen labor market, two-thirds of employers are taking measures to strengthen their recruiting and retention efforts in preparation for an economic recovery. For example, almost one-third (31 percent) of employers are adding to or modifying their sales training and reward programs for this year.

"Most companies expect business conditions to remain challenging throughout 2009. At the same time, many are realizing the only real path out of the recession is to grow revenues rather than use short-term remedies or cuts. As companies plan for the balance of this year and next, having focused and motivated sales forces will be essential to that effort," said Bremen.

Copies of the survey, "Strategies to Manage Sales Force Investments in the Global Recession, Update: April 2009," are available at http://www.watsonwyatt.com/salesinvestments.

About Watson Wyatt

Watson Wyatt (NYSE:WWNASDAQ:WW) is the trusted business partner to the world's leading organizations on people and financial issues. The firm's global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 32 countries and is located on the Web at http://www.watsonwyatt.com/. 

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