I was reading a blog, this morning, from a consultant firm that I consider to be very sound, until this moment, on this subject. The subject was the area of compensation for sales teams. They wrote all about making sure that the sales compensation drove the strategic objectives of the corporation. While that sounds reasonable, the baseline assumption is not valid. Because inherent in that belief is the fact that the only tool most management will use to keep folks in sync happens to be their personal income. Pure manipulation, not motivation!
But what really floored me was that within their assumption set was a metric about a world-class compensation system and the artificial barrier to success called a “quota”. This is not new, and we have all seen it for years. Their metric said that a great system has 45%-55% of the people NOT achieving quota. Again, that is not far from the reality of that statistics of what truly takes place…and that was stated to be OK.
Really? How can it possibly be OK that 45%-55% of your team FAILS? In those arcane individual commission-based systems the first hurdle to “success” is achieving an outcome where failure more than half the time is acceptable.
Would you really accept 50% failure of ANY other part of your team? 50% failure of shipping product on time… 50% failure of new products… 50% failure on a quality front… 50% failure of accounts receivable. NO, none of that would be OK. Yet we set up the “coin-operated” sales team with a hurdle to success that it is OK to miss… half the time. In no way does this even make a little bit of sense. That’s not even remotely close to being motivating. That’s just insulting! And sadly, it’s quite common in the world of compensation of sales teams.
Please go back to my earlier blogs on the Poison Known as Commission and check out the DATA that says this compensation methodology is highly flawed.
In this changing world, we truly need to shift our thinking into what we can do that will change the game for the better, and it is through true COACHING and LEADING that we can make a difference in the world around us.
Kill the commission systems… GROW the COACHING and LEAD the world to a better place.
OK, LET’s ROLL!