Pressure to hit higher quotas, compensation caps, and changing sales strategies are making it harder for Cisco’s salespeople to be paid fairly, and some of them are looking for the exits, according to a recent article in Business Insider.
Despite a recent slowdown of revenue growth at the tech giant, which is worth over $250 billion, salespeople are being pushed to meet higher quotas than ever before, according to current and former employees who spoke on the condition of anonymity.
These higher quotas are causing people to pack up and leave Cisco, particularly those in enterprise sales, who are tasked with closing the biggest deals at the company. At least 12 people from that division have left in the last year, according to their LinkedIn pages.
"We're fortunate to have one of the best sales teams in the IT industry. As we transform Cisco's business model toward software and subscriptions, we need to evolve how we compensate our sales team," a Cisco spokesperson recently told Insider. They stated that the recent change was “in alignment with industry best practices."
Before, salespeople earned a base salary, with additional commissions according to the size of the deals they closed. In 2019, in an attempt to make salespeople close larger deals, Cisco cut people’s base pay but promised much more money if they exceeded their quotas.
"A lot of people didn't like that because no one likes their payday to go down," a current employee told Insider. This employee did manage to exceed their quotas that year and make the corresponding commissions.
However, for most people at the company, rising quotas, changes to metrics for achieving those quotas, and slowed company growth have made it almost impossible to make the same amount of money they were making under the old compensation structure.
"The goals certainly weren't getting any smaller. The company was only growing by 2%, and goals were growing by exaggerated multiples of that," a former employee, who left in 2020, told Insider. "It got to a point where it became unrealistic."
More recent changes have added to people’s frustrations. Last October, Cisco decided to “pool” its sales teams, asking individuals with specialties in products or regions to collaborate on bigger deals than before. But instead of proving the old adage “two heads are better than one,” the higher quotas simply made things unmanageable for employees.
"Now your number is so large that it doesn't matter if you work hard or you don't work at all. When you can have a $50 million goal, what the hell is that $2 million deal going to do for you?" the current employee said. "You're not going to ever reach your goal, which means you're not really making money."
Even as quotas were rising beyond reasonable expectations, employees were being penalized at the higher end for exceeding them. An inconsistent pay cap limiting total compensation above a particular number led people who came up against that pay cap to quit the company in some cases.
"If you're able to be successful even against this huge number — let's just say you pull off a miracle — you're told that they're also putting a cap in, and that hurts," a former employee told Insider.
Salespeople within the company attribute this shift in strategy to Cisco’s larger ambition of maximizing shareholder value–by sacrificing sales salaries for the sake of their bottom line. Given that Cisco’s growth over the past few years has slowed significantly– revenues grew at a 2.1% compound annual rate in the decade leading up to 2020, compared to 7.8% in the decade prior–cutting costs in the sales department seems an easier path to success.
"I think at some point, Cisco shifted in the mindset from a growth play to a predictable run-rate profit play," a former employee told Insider. "There's a pressure saying, 'Boy, if we lower our cost of sales, that will go directly to the bottom line, and maybe that will be a better outcome for our shareholders.'"