Ratio of Reps to Managers - Q&A

by Dave Kahle

Question:

What is the ideal number of sales representatives that a sales manager should manage?

Answer:

Good question.  As is commonly the case, my answer begins with “it depends…”

Compensation

          It depends, first, on the type of compensation plan that is used to pay the sales force.  I often confront this issue in our work with sales compensation plans.  One of my rules is this, “The nature and type of compensation plan directly impacts the quantity of sales management.”

     For example, if you have a 100 percent variable plan, where the sales people are paid purely on some formula for their results, then you can go with less extensive sales management.  The idea is that a well-crafted, 100 percent variable plan will, to some degree, step into the gap and influence the sales people to manage themselves.  In such a case, I can see one sales manager for every 10 – 20 sales people.

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     On the other hand, if you have a sales compensation plan with a relatively high percentage of fixed income (i.e. salary or draw), then you need to fill the management gap with people.  In these cases, one sales manager for every seven or eight sales people is an appropriate ratio.

Touch Ratio

But that’s only one variable.  There are others that impact this ratio.  The “touch” component of the situation is another important variable.  The “touch” component refers to the degree to which the sales person and sales manager actually see one another and work together.  The lower the “touch” ratio, the lower the ratio of sales manager to sales people.

     Take for example, an inside sales situation with a group of people on the phone, supervised by someone there with them, and contrast that to the same number of sales people, spread geographically around the country.  The inside situation is relatively “high touch,” and the outside relatively “low touch.”  With everything else being equal, the high tou... READ THE FULL ARTICLE HERE