In Sales and sales management circles few would argue that compensation, a major component of which is income, is trivial or a minor issue. Modern management theories tell us that not only happy workers stay longer, but also they are more productive. We know that pay is often top of mind for employees, but other factors also chart well. When one is not caught in the vice of low or unsatisfactory pay, one is enjoying his or her work and is therefore engaged, committed and sees a future.
In the book The Code of The Extraordinary Mind the author speaks to Richard Branson about the secret to the billionaire’s serial success. Branson tells the author the secret is to have a vision, hire great people to execute it and then get out of their way. Notice, he didn’t say pay them 30%, or whatever, in commissions.
Imagine now for a moment all this evidence, wisdom, research and information out there and next to none of it is applied to the profession of sales by the responsible management and the companies at which they work. The whole thing is on autopilot, has been for years and clichés abound. The conventional wisdom hangs like an albatross around the neck of management and human resources. In the well-argued book Drive author Daniel Pink makes an evidence-based case for not paying salespeople commission and SPIF when creativity is required.
Is any company taking heed of the applicable information? All indications point to the answer being ‘no.’ This website has long argued that people management has to be personalized for the individual and one size does not fit all. Why are so many sales departments and companies struggling, and why does anyone need extra pushing and shoving, if salespeople uniformly respond to extra commission and variable incentive? The answer is that salespeople do not and like any other profession and group individuals respond differently and have different motivations. We even wrote about motivation for salespeople as a function of their cultural background on this site in November, 2016.
Why then are companies not overhauling how they compensate their employees in general and sales department in particular and instead prolapse to the same old? We know now that as a matter of random statistics most of the sales team likely responds better to and is more responsive to things other than being paid on commission. How about looking at 100% salary entitlement? In addition to the above arguments, there must be a reckoning that today’s customers are better informed and sales is becoming more of a team sport. A successful sales team is not only comprised of different people (inside, outside, technical, post-sales consultancy..), but also requires adapting to customers’ buying process, which is an outward outlook and not necessarily satisfied by internal necessities.
Instead could individuals be motivated and double their efforts for:
- Peer and employee recognition
- Additional time off
- Health, or other, club membership
- A gift card for the salesperson’s significant other
- Paid learning opportunity or mentorship
- Paid-for recreational classes such as cooking, climbing or arts and crafts,
- Job promotion (with a caveat)
Keep a higher emphasis on variable compensation for those who are actually and demonstrably motivated by it and remove the yoke from those who just do not care for it and either do not perform better given the scheme or do so only marginally.
There is no doubt that driving sales and winning deals is the raison d’etre of any sales organization. The question we should be asking is what actually drives performance versus what we have always accepted drives performance.
Indeed, sales management must measure all that leads to a sales win (could be customer engagements, presentations, customer meetings, marketing response rates, etc.) and develop a compensation plan based on low and upside potential calculations, team alignment, composition and of course how all of this is being measured, but understand that the drive to create the components of success is propelled by different means among individuals.
*Things That Need To Go Away: We Do It That Way Because It Is Always Done That Way