Flora Kam wrote in suggesting that the key in these situtations is to quickly diagnose the underlying problem before addressing the specific comp issue. Missed quotas could be a result of internal factors affecting sales like production problems or external factors such as a market downturn. While not recommending it as general practice Ms. Kam notes that management may have to revise the quota after the fact. Whatever management does they will need to act quickly.
Here’s what actually happened. When none of the sales reps made target, the CEO had no trouble coming up with a solution. All the targets were revised after the fact so that the reps-surprise surprise-did get bonuses after all. The sales reps took this in stride, the CEO still had to justify the overall results but his basic argument was that the planning department had screwed up with poorly thought out targets.
Since the alternative, potentially losing a lot of experienced sales reps, was so obviously a bad thing, everyone was happy to forget about the “integrity” of the pay-for-performance system.