Right sizing your sales capacity plan

Recently there have been a wave of layoffs. Organizations tend to hire into the growth curve, meaning that they’ll invest in upfront headcount in the hope of producing accelerated revenue. When this doesn’t happen, the expense slope steepens faster upward towards the revenue growth line. The shrinking gap, known as profitability, narrows more quickly. Organizations focused on valuations based on EBITDA or earnings are then forced to rightsize the gap. The only way to close this gap is to cut costs where possible. Often, this means layoffs.

So as we round the corner into annual planning it behooves revenue operations leaders to partner with finance to determine what is possible.

Today I’d like to talk about the following:

• Spans and controls

• Organizational layers

• Organizational sales cost (theoretical and projected)

• Quota attainment projections

First, let’s examine span and control. Assume you’re going after $45M in bookings. You might design it like this on a top down basis: