Part 3: The Cure – The POISON Known as “Commission”
Our past does not have to dictate our future. Only if we choose not to learn from it will we be forced into duplicating it.
So lets learn from it.
We are not happy with a 35% turnover rate. If you are… bless you and good luck!
We want a truly engaged sales team, service team, client team, all of our teams.
How do we accomplish this? Here are the answers.
- Hire for fit
- Train for skills
- Connect with them
- Lead by example
- Walk the talk
- Stop manipulating them with commission
So, just to set a baseline, let’s look at the bottom line of this kind of shift. The company that I currently work for is Microchip Technology Inc. I have been there for more than 30 years. I am currently privileged to lead our WW Client Engagement team of about 1700 people. Microchip is a ~$5.5B company with a market cap (based on the hourly market sentiment) of ~$20B. We are highly profitable and just finished our 117th consecutive quarter of profitability, a record that no other semiconductor company can match.
We moved our entire global team to a non commissioned comp plan in 1998. The best thing we ever did and our clients tell us regularly that they appreciate what it brings THEM. As we converted our team we lost zero of our folks. Since then we have completed 20 acquisitions in the last 10 years and integrated global sales teams into our system at a 95% plus acceptance rate. Our team’s turnover rate is less than 3% globally across 114 countries served out of 77 offices and serving 122,000 clients.
What you will also find is that there are many other companies that have learned the value of not manipulating their sales team (meaning they are non commissioned).
- Other leading companies in the non-commission sales space
- Best Buy
So just WHAT do you do… specifically?
First, you start with UNDERSTANDING. Understanding what TRULY motivate people… ALL people.
Motivation comes in two forms… Extrinsic motivation and intrinsic motivation. Extrinsic comes from outside sources, outside forces such as money or praise. Intrinsic motivation comes from within yourself, understanding your own real purpose.
The old world of Motivation 2.0 (Author – Dan Pink) is all about carrot and sticks and uses “if then” rewards to encourage short term trade-offs of decisions and inherently delivers no long term positive outcomes. Motivation 3.0 the next generation of working understands that people only act when they are intrinsically motivated, can act on their own strengths, and feel that they can make a difference in a bigger way. To truly understand this and the framework below you must go read the book DRIVE by Dan Pink. His research covers decades of understanding what really motivates humans (and salespeople ;-).
Dan describes Extrinsic and Intrinsic as:
Extrinsic motivation is when you use external factors to encourage your team to do what you want. Pay raises, time off, bonus checks, and the threat of job loss are all extrinsic motivators – some positive, some less so.
Intrinsic motivation is internal. It’s about having a personal desire to overcome a challenge, to produce high-quality work, or to interact with team members you like and trust. Intrinsically motivated people get a great deal of satisfaction and enjoyment from what they do.
According to Pink, intrinsic motivation is based on three key factors: Autonomy, Mastery, and Purpose.
- Autonomy – the desire to direct our own lives.
- Mastery — the urge to get better and better at something that matters.
- Purpose — the yearning to do what we do in the service of something larger than ourselves.
Do you want to understand what your team really thinks about “motivation”? Go read Dan Pink!!!
To break the curse of 35% turnover you MUST break the cycle of manipulation. If you don’t step away from the individualized, quota-based, only revenue counts, compensation plan you will be forever stuck with the challenges that replacing your team every 3 years creates.
You must dig in and understand AMP both organizationally and personally. We must break the thinking cycle… We must develop skills in curiosity, creativity, critical thinking, problem-solving, collaboration, project management, and orchestration. Yet the normal response from sales executives is “how can I afford to invest in developing these skills if the salesperson is going to be gone in 15-22 months”? The answer…. This level of turnover is NOT acceptable. The cycle MUST be broken if you wish to evolve.
And it starts with countering the poison… and the thinking that keeps it alive. Understand clearly that…
- Your clients have TOO much data, they are overwhelmed and now in PAUSE mode.
- It is mostly good data from multiple perspectives
- It is also contradictory, what one source says, the other counters
- They are concerned about THEIR ability to make a good decision
- They also know that the ‘salesperson” calling on them has a personal incentive bias which quickly taints anything they have to offer. You cannot be trusted to be client-centric. You are back pocket centric.
We must remove the bias that is clearly evident to the client. That bias is a salesperson personal gain. When you remove the personal incentive bias the client and the salespersons have a different relationship and conversations Open, candid, seeking a trusted advisor. Unbiased!
They KNOW that you have a motive to simply serve, helping them achieve what they NEED, not what you WANT!
Do you want 40% of your time back? Kill commissions. You can do that AND not raise your cost of sales, AND drop your turnover rate to single digits, AND have clients that are your evangelists. With all-time on your hands you will have gobs of coaching and leading work that you can do. Or perhaps that part scares you!
Considering the COVID-19 world changes, this will give you a chance to explore and perfect the VIRTUAL RIDE ALONG! I’m just waiting to see augmented reality come to the virtual sales call world. So long trade shows!