Let’s Talk Compensation

 Articles, Management, Uncategorized  Add Comments »
Aug 272017
 

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 a portion 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? There is also this, which likely lead to companies taking action like this.  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.

ventilation pipe (flexibility)

Photo Credit: Bilderjet

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

 

Individual

Photo Credit: Geralt

 

Sales & Motivation

 Articles, Management, Uncategorized  Add Comments »
Jun 292010
 

Have you noticed how sales teams often have loud meetings and boisterous events to pump themselves up? Yet, this activity is seldom seen elsewhere. Whether the position has metrics (lawyers, doctors, truck drivers, teachers, etc.) or not (secretaries, assistants, handymen, etc.) other professions rarely engage in similar action to boost morale or pump up the group. Why?

For one, the energetic activity has short-term effect and could be self-defeating once repeated too often. Banging a gong can rouse people and certainly draw attention, but if repeated can lose it efficacy. In other words, this type of motivation is alas short-lived.

 

Why would managers follow such techniques: Perhaps the answer is a short term boost is warranted. Fair enough. Often though it is a lack of known alternatives or desperation that drives management to doing things that do not have the necessary impact. Management does not know about an alternative.

 

While the earlier mentioned behaviour has merit, one wonders what sort of an action could have a longer-term effect? The answer is training/education and the feeling that one is part of something bigger and in a team environment. Both are factors in competency and self-motivating. One of the requests and needs that employee clamour for, other than base pay and a work/life balance, is education. Not only is education motivating, but also the act of knowledge helps with consistent and longer-term enthusiasm that lasts beyond the adrenaline of a loud sales meeting. Simply put, people like doing what they are good at. On the flip side, how is it that managers often ask their salespeople to do what they do not know how to?

These are the goods for lasting motivation.

Being good at something provides for the self-sustaining adrenaline that drives the individual. Helping someone get there, coaching them for better results and allowing them professional education are longer term solutions for motivation.

Managers and organization should pay close attention because education credits and training are one of the pillars of sales employee satisfaction and simultaneously positively affect the salesperson’s performance. Performance clearly has to be measured, which suggests education and training need to be monitored and staff held accountable for practicing it.

Salespeople need skills. The motivation is a by-product of being good at their jobs.