Sales Pay Plans Written By Non-Sales People


It’s not uncommon for Clients to ask me to review their Sales Pay Plans. Often, this involves making changes and additions to what’s already written, to make it an effective and productive program for everyone involved. Nearly as frequently, though, this requires me to write whole new sections that are just plain missing. Thankfully, it’s a rare occasion for me to come across a section of a pay plan that needs to be excised completely. That did happen recently, however, when I came across a clause in a Client’s pay plan entitled “Windfall Business”. Here’s how that clause read:


“To provide for those unusual occasions when business achievement is realized through little or no effort on the part of a Participant, the Company reserves the right to declare such business a ‘windfall’. Windfall business is subjected to special treatment. Such treatment will be handled at the sole discretion of the Plan Administrator.”

I’m thankful that, when I first read this clause, I wasn’t in the presence of the Client. No doubt, my reaction was visible and it probably wouldn’t have been good for our relationship for them to see that. At first, I wondered what could have motivated such a position. Then, I wondered how my Client could have permitted it to be embedded in their pay plan. Finally, I decided that neither of those considerations should be my immediate concern. I had been introduced to this Client under the auspices that “they need a guy like (me) to turn their Sales around.” So, regardless of the answers to my “what & how” questions, I knew that their “Windfall Business” clause was a counterproductive element for Sales. They needed to understand that clearly and immediately. Here’s how I went about getting that done:

I, simply, shared with them some of my background in helping to develop Sales People. What I told them was: ”I’ve had occasions where, fairly early on in their efforts, new Sales People would have a stroke of good luck and close some significant business more quickly than they expected. In these cases, it wasn’t uncommon for the Sales Person involved to express some guilt, that they hadn’t really earned the sale. My consistent response in these instances was to tell that person that all Sales People get their share of luck … some of its good and some of its bad. You’re going to get your share of bad luck so, when you get some good luck, enjoy it and don’t feel guilty.” That was really all it took. From that, my Client recognized that their “Windfall Business” clause allowed Sales people to keep their bad luck but they didn’t necessarily get to keep their good luck. They agreed to remove the “Windfall Business” clause from their pay plan.

You may be interested to know that, in discussing this matter with my Client, I did learn the answers to my “what & how” questions. The answer to ”What could have motivated such a position?” was that it was a clause developed by an HR Consultant. The answer to “How my Client could have permitted it to be embedded in their pay plan?” was that they’d payed the HR Consultant for their advice and the Client felt they should follow the advice they’d paid for. In both cases, it’s an indication that both the HR Consultant and the Client don’t “get it” when it comes to what I called the “legitimacy to the Sales function in business”, in an earlier article entitled “The Pride and Prejudice of Sales“. And, I have to admit, with something like this; it may require a person who has Sales experience to “get it”. To many, who don’t have Sales experience, it may even seem to have a certain logic to it. And, that’s why I think my Client’s erstwhile “Windfall Business” clause is a great example for my point in this article:

In order to establish a Sales Pay Plan that’s effective and productive for everyone involved, don’t have it written by Non-Sales People!

What’s your experience been with Sales Pay Plans along these lines? Do you have other good examples to share? Do you agree with my perspective on the “Windfall Business” clause? Please let us hear from you, to benefit others through the experience you’ve gained!

They Don't Make 'em Like That Anymore

My parent's generation, the G.I. Generation - aka The Greatest Generation - and their parents, were the ones who truly got to enjoy what's known as "The Golden Age of Radio". But, there were some remaining vestiges of that era when I was pre-school-aged. I remember hearing some of it, waiting outside, along with my older Brother and Sister, in our black 1951 Chevy Bel Air, while Mom did the grocery shopping at the A&P. We would entertain ourselves by listening to the car radio. Mostly, we would listen for some of that new Rock 'n' Roll music, interspersed with the stuff that old folks liked ... Don McNeil's Breakfast Club, Big Band Music, News, Weather, etc. However, there was a unique personality that seemed to fit in with "the stuff that old folks liked" that stood out and appealed to me. He would capture my attention, from the outset, when he would come on and say,

"Hello Americans! This is Paul Harvey!

... Stand by for News!"

That captivation endured for most of six decades, until Paul Harvey passed away, recently, at the age of 90. It may be beyond me to fully define what it was about Paul Harvey that I found so appealing. What, generally, attracted me was a sense of a good person, with a good message ... the sort you hear esteemed with the statement, "They don't make 'em like that anymore". I think it may be more accurate to say, "They don't make many like that anymore" but I do believe Paul Harvey's sort are rare and are rapidly becoming even rarer. With that in mind, my motivation is to try to identify the qualities I found so appealing about Paul Harvey, hoping that we can encourage it in our culture, rather than just watching it depart along with Mr. Harvey and his generation.

Probably like most of his listeners, I never met Paul Harvey. So, when I speak of his qualities, I'm mindful that these are characteristics of his public persona. However, I've never heard even a hint of an indication that Paul Harvey's "real personality" was much different than his "radio personality". With that understood, the qualities that stood out for me in Paul Harvey are these:

He gave his work his best effort. His work was "News and Comment" and he was exceptionally skilled at it. Although he didn't dodge news that was unpleasant or try to sugar-coat it, one thing that set Paul Harvey apart was that you could count on him to find and to report good news. And, he didn't just "report" the news, he told stories ... great stories, that were uplifting, told by a great story-teller. His renowned segments known as "The Rest of the Story" offer the best evidence of this.

He, unfailingly, honored his Wife. Although her given name was Lynne, Paul Harvey called her Angel. They married in 1940 and the Harveys remained together until she passed away in 2008. Angel was mentioned often in Paul Harvey's broadcasts and always with great warmth and respect.

He was, unashamedly, a man of faith. However, I don't remember him being critical of others for having different views. This applied to other personal views, as well. It wasn't hard to tell that he was a Conservative and though prominent Republicans like Thompson, Huckabee and Romney have filled in for him, I don't recall him ever voicing partisan positions.

He was an unflinching American Patriot. It was said that Paul Harvey was "the Norman Rockwell of radio", honoring anonymous Americans with his words, the way Rockwell did with his painting. In 2005, President George W. Bush honored Paul Harvey's patriotism with the Presidential Medal of Freedom.

An exceptionally skilled professional, who is unabrasively dedicated to his family, to his faith and to his country. There are some qualities I'd like to see encouraged in our culture ... especially with members of the media and others who are looked to as role models. My prayer is that this will be the case, as a suitable tribute to Paul Harvey, rather than just seeing these qualities further diminished in our culture with the last saying of,

"Paul Harvey.

... Good Day!"

Selling and Business Humor


On two occasions in the past few months, I’ve had the pleasure of attending meetings of the Executive Officers Club, at Portland’s Multnomah Athletic Club. There were numerous positive experiences associated with these events, that merit comment. However, the most notable experience, as it relates to this blog, came from The Keynote Speaker for the most recent meeting I attended. His name was Tim Gard and his topic was “Business Humor”. Before sharing my views on the noteworthiness of Mr. Gard and his presentation, relative to the SOL&D blog, let me tell you a bit about Tim and his perspective on “Business Humor”.


Tim Gard is a CSP (Certified Speaking Professional) who focuses on dealing with stressful circumstances in business, through humor. Most prominent in the multiple methods and techniques that Tim employs is his utilization of props. As an example, Tim has a nicely printed and bound booklet entitled “My Official Policy Manual”, that he carries with him. When he finds himself in a circumstance such as having a Flight Attendant tell him that “Its against the policy of the airline to upgrade a Coach Seat to First Class”, when Coach is oversold, he can pull out his “My Official Policy Manual”, to show them a differing policy, thus breaking any tension and often, getting himself a First Class upgrade. The prop that I think tells the most about Tim’s methodology, without giving you his whole presentation, is his Major Credit Card. Here are the basics on this:

As a CSP, Tim travels a lot and he’s found that, often, he arrives at his destination hotel fairly late.

In this circumstance, Tim will walk up to the Reception Desk and say, “Hi, I’m Tim Gard and I have a reservation.” He’s found that, consistently, the Reception Desk Clerk will look up and say, “What is your name sir? Do you have a reservation and do you have a major credit card?” Thus Tim’s development of a prop to help diffuse this annoying situation, that can become more and more stressful.

Tim’s Major Credit Card is credit-card-sized but it doesn’t have raised, imprinted information. Its green with white printing that includes his own logo in the lower right corner. The rest of the printed information includes: “This is a MAJOR CREDIT CARD”, Tim’s 1 800 number + 0000 (in the place of the credit card number) and the name Ima Traveler.

At first, being presented with Tim’s Major Credit Card can cause some bewilderment. So, typically, the clerk will ask for “Some other form of identification.” You guessed it, when you turn Tim’s Major Credit Card over, the backside is printed with the words “Here is SOME OTHER FORM OF IDENTIFICATION”, along with his Web site and other contact information. With this, usually any building anxiety is broken and often, Tim winds up with a room upgrade.

Hopefully, you now have a general understanding of Tim Gard’s approach to the topic of “Business Humor”. But the question remains, where does this fit in with Selling? Well, I think it fits in with the philosophy that companies don’t buy from companies, people buy from people. That means, as a Sales Person, in addition to developing good Selling Skills, its good to be a well rounded person. I think this is particularly true with Consultative Selling. It seems to me that having a good sense of humor is an important facet to being a well rounded person so I recommend that all Sales Professionals give this proper attention.

But, what is “proper attention”? Should Sales People employ Tim Gard’s methodology? I suppose there are some roles where this might be appropriate but I don’t think that’s the case for most. In the majority of Sales and Sales Leadership roles I’ve held, I don’t think direct application of the Tim Gard approach would be appropriate. In fact, considering those roles and especially considering my personality, using Tim Gard’s techniques might have caused me to come off as a clown, thus diminishing my effectiveness.

What I consider ”proper attention” to this topic includes a few steps, including:

Give some attention to ways humor applies in the business environment. Although Tim Gard’s methodology may not be right for you, taking a look at it and other examples, can give you a better understanding of humor’s application in a business setting.

Give consideration to your personality and the culture/s you typically find yourself operating in. Some things that are a “crack up” in a factory setting may not be so funny to folks in the back-office.

Of course, timing and general circumstances are important. It may be OK to share some friendly jibes with a longtime Customer, as you’re walking to a meeting but that’s not appropriate when you’re initiating a business contact.

Give some thought to what you view as being appropriate. This is not only important for how you conduct yourself but for how you react when another uses humor that you consider to be inappropriate. I’ve certainly had occasions when Prospects and Customers have told me ethnic jokes, as an example. I can’t tell you how you should react to this sort of thing but, these days, ethnic jokes are usually considered to be inappropriate and your reaction to someone else doing this should be considered.

Finally, I do recommend trying Tim Gard’s philosophy, if not his methodology, for dealing with stressful situations. On numerous occasions, I’ve found myself in stressful circumstances where those I was dealing with were proposing precipitous actions. A stock response I’ve used in such situations is to say, “We can always do that but, you know, the sun isn’t going to stop in the sky, if we don’t. First, lets see if we can come up with some alternatives that are better for us all.” Obviously, Tim Gard’s humorous approach could be fitting here too.

So, do you agree with my views on being a well rounded person being important in development, as a Sales Professional? If so, where do you think humor fits in? What is your experience in this regard and what direction can you offer?

Comments
 
Partner Profile Girl Says:


April 20, 2010 at 1:51 am edit

“So, do you agree with my views on being a well rounded person being important in development, as a Sales Professional? If so, where do you think humor fits in? What is your experience in this regard and what direction can you offer?” – I do agree, some clients may be hard to read or hard to drop a joke just to freshen up the ambiance. Humor is really important. Though we still need to be serious, it actually depends on what meeting or whatnot you are in.

My First Social Media Group - Circa 1955 - Lessons For Today From The Baby Boom

I suppose anyone past the age of 30 gets occasional "Remember When" email messages. As a Baby Boomer, I suspect that may be particularly true for folks my age. Typically, they start off with things like:

Do you remember when ... ?

• All the girls had ugly Gym uniforms?
• It took five minutes for the TV to warm up?
• A Quarter was a decent allowance?
• ...

And, generally, they conclude by lamenting how much better things were "back then", compared to the world today.

Of course, its true that there were many qualities of that era of "Remember When" that would be wonderful to restore. A good example that springs to my mind is how my buddies and me could safely be all over our neighborhood, from dawn to dusk, without any immediate adult supervision.

However, its just as true that there are aspects of "back then" that today's world is better off without. What I think of first is that, in those days, in the neighborhood that my buddies and me were all over, there were no "colored people" ... they all lived in their own part of town.

But, looking back and longing for what was good in the past, while letting the not-so-good fade away seems natural enough. What doesn't seem natural to me, though, is that these "Remember When" laments aren't accompanied by a call-to-action to actually do something to restore some of those wonderful qualities from "back then".

In an earlier post entitled "Rebuilding Lake Wobegon", I talked about my generation, the Baby Boomers, having “A Great Wealth of Wisdom” to offer younger generations. We were lavished, more than any other generation, with education. Moreover, we were raised by the GI Generation, who instilled us with a great work ethic. That meant, not only did we get a great education, we actually went out and tried to accomplish everything we could with that resource and in the process, grew the resource by honing it with experience. Included in our experience, of course, are those wonderful "Remember When" qualities, whose restoration would benefit today's world. As I said in that earlier post, if we don’t find a way to transfer this “Great Wealth”, IT WILL DIE WITH US! So, I want to encourage my fellow Baby Boomers to start looking for every opportunity we can find to make that transfer.

In just the past couple of weeks, I've realized I'm participating in an "opportunity area" where I don't encounter many other Baby Boomers. What I'm talking about is, generally, known as Social Media. Specifically, I'm talking about Twitter. Even more specifically, I'm talking about a Twitter Tweetchat Group that follows the Hugh Hewitt Radio Show. An overview on how this works is:

• Twitter allows groups to form by using "hashtags". This is, simply, a # symbol followed by other characters to designate a specific group. In the case of the Hugh Hewitt Radio Show, its #hhrs. Get it?
• Once you log on to #hhrs, you "see" the others who are "tweeting", along with their "tweets".
• Since its a radio show, while "tweeting", you also listen to the show, online or via broadcast.
• The "tweets" are exchanged among the show's listeners, Producers and occasionally, Hugh and his guests.
• Although much of the "tweeting" is about what's on the show, many other topics get attention. As #hhrs "Regulars" get better acquainted, more personal "tweeting" goes on too ... "What are you doing for your birthday tomorrow?", "How did your Mom's medical treatment go?", etc.
• This group even takes on themes of its own, completely separate from the show. As an example, one day this past week, we decided for the group to take on the personality of the old Andy Griffith TV Show, with each "Tweeter" becoming a cast character and relating to Hugh Hewitt in the Sheriff Taylor role. Before you know it, almost everyone had changed their Twitter avatar to a picture of one of the Mayberry characters (Barney, Opie, Aunt Bee, etc.), indicating that they were taking on that role. I know it sounds pretty goofy but it was fun.

Based on what I've told you so far, even if it doesn't sound like something that would be your "cup of tea", if nothing else, you can see how this would help in developing multi-tasking skills. However, as I was logging on to #hhrs recently, I recognized something strikingly familiar and in turn, potentially quite valuable in the effort I'm encouraging, to pass along our "Great Wealth". Here's what happened:

• Its not uncommon for a #hhrs "Regular" to make their presence known by "tweeting" a greeting to the group logged on at that time.
• On the occasion in question, I found myself "entering the scene" with the words. "Come along and sing a song And join the jamboree!"
• As I was recognizing the familiarity of what I'd done, almost instantly a "tweet" came back saying, "Hey! there, Hi! there, Ho! there You're as welcome as can be." and "Forever let us hold our banner High! High! High! High!" ... My words and the ones coming back to me were the lyrics to the "Mickey Mouse Club March" ... a song I'd first sung as a seven or eight-year-old kid, in front of my black-and-white TV, in 1955.

As I recognized that familiarity, I was struck with the realization that not everything about this "New Media" was so new. I'd done this before. Of course, there are major differences between black-and white TV and the Internet. Likewise, what an Elementary School aged kid learned from Jimmy Dodd and The Mouseketeers is not on the same level with the knowledge a Boomer can gain today from a discussion between Hugh Hewitt and Charles Krauthammer (as an example). And, #hhrs "Regulars" have real-time dialog whereas Mickey Mouse Club Members had their discussions later, on the playground or the following day, on the school grounds. But, in both cases, wholesome learning takes place, views are shared, relationships are established, the community is enriched and the culture benefits.

As I said earlier, with Social Media, I've realized I'm participating in an "opportunity area" where I don't encounter many other Baby Boomers. I want to change that and I hope this article will help. Please, don't be intimidated by this, as "New Media"! We've done this before ... in my case, starting over 50 years ago! Be courageous! By doing this, you won't have to resign yourself to just lamenting the loss of good qualities from that "Remember When" era. You can have an active role in restoring positive aspects of the culture "back then" to benefit society today. Remember, all you've got to do to have an impact here is ...

Come along and sing a song And join the jamboree!

Forever let us hold our banner High! High! High! High!

WARNING! I need tell you about another part of this that hasn't changed ... ya still gotta do your homework first. With the Mickey Mouse Club, even if your parents worked and the kids were at home alone after school, they'd better be able to get their homework done, if they're going to watch TV, go to the playground, etc. Likewise with Tweetchat. It can be addictive.

“Closing”, Another “Bad Word” In Sales?

Recently, in a conversation with a colleague, I used the word “closing”, relative to Sales. This person, literally, cringed, in response to my use of the word. I’ve had that sort of reaction numerous times before. Maybe you have too. Every time it happens, I silently wish that I could do something to have this topic viewed in a more favorable light.


It seems that there are negative connotations that go along with the word “closing” that are similar to what I addressed in an earlier posting entitled “The Pride and Prejudice of Sales“. That article dealt with a commonly found bias in our culture, equating the title “Sales Person” with the label “Huckster”. With those who hold that view, I suppose they envision “closing” as the time when “the Huckster springs his or her trap.”

One publication I’ve found, that does a good job of tackling this issue is “10 Steps To Sales Success“, by Tim Breithaupt. Here, the ideal Sales process is described as “… a mutual journey of honesty, trust and respect as you and your Customer work in harmony …”. In this context, the Author presents “closing” as “… confirming the sale using a non-manipulative, straightforward approach and presenting a practical, value-added solution.” I think that is an excellent way of expressing what I’ve longed to be able to do in the situation I mentioned earlier when I said, ”I silently wish that I could do something to have this topic viewed in a more favorable light.”

Since Breithaupt does a good and thorough job on this theme, I won’t bore you with a rehash here. However, I do want to add a bit to one facet of the matter that Breithaupt touches on. Its where he says, “You need to be engineering commitment throughout the entire sales call because anything you do or say, at any step, will either erode or enhance the sale.” I agree with that and I just want to emphasize that this doesn’t apply to just an individual sales call. Though that’s not what Breithaupt is saying, I think this point can be overlooked. Failing to see this leads to another of the biggest misconceptions about “closing” – i.e., that it is the terminus, the final act of a sale. However, “closing” shouldn’t be regarded as a finishing point. Rather, the “engineering commitment” should be taking place throughout the entire Sales process. The best definition I’ve learned for “closing”, in this respect is “a commitment to positive action” on the part of both parties. In other words, a “quid pro quo”. In the early phases of a Sale it might be something like, “If I’ll put together a 30 minute presentation showing how we can help your company save X cost over your current method, will you set aside that much time on your Calendar and have your CFO attend with you?” Unlike “springing a trap”, these sort of calls for “commitment to positive action” on the part of both parties is really just a way to determine if and how the Sales process is ready to move forward. This, too, hearkens back to what I spoke to in “The Pride and Prejudice of Sales” – i.e., “There is a legitimacy to the Sales function in business. It isn’t ‘palming off.’ That is hucksterism. “

So, as always, let me ask you, what are your views on this topic? What have you read that you think does a better and/or more thorough job of discussing this issue? Please share any and all input. The goal here is to share the richness of our experience for the mutual benefit of the group.

Comments

Justin Hitt Says:


February 5, 2009 at 8:25 am edit

Thank you for pointing out the use of the word “closing” doesn’t mean the END of the sales process.



I’ve always considered and thought clients that “closing” is like you do in accounting at the end of a month — then you “open” again into the next part of the selling process which is “service.”



Too many still associate “closing” with hard sell tactics that never really worded. By shedding light on the after sale service necessary to keep customers, you are helping change this misconception. Thanks.



Best,



Justin

A Prayer In Baltimore

Although I didn't vote for Barack Obama, I do want his presidency to be successful. However, as the public celebratory events started on the weekend prior to Obama's inauguration, I have to admit that I wasn't drawn to join in the celebration. In fact, I found myself going into sort of an "auto-tune-out" mode. I suspect I'm not alone in this. However, I really do want to be supportive of the Obama administration where I can and I want to encourage others to do likewise so, while my reaction is probably pretty natural, I want to be on guard about it.

I guess this is just one of those situations that, growing up in Indiana, we would define as, "Says Easy but Does Hard." Thankfully, something broke through my "auto-tune-out" that I'm finding to be helpful on the "Does" part. It took place on the Saturday prior to the inauguration, as the Obama Train, making it's way to Washington, D.C., made a stop in Baltimore. Prior to Obama's introduction, to speak at Baltimore's War Memorial Plaza, Dr. Walter Scott Thomas, of Baltimore's New Psalmist Baptist Church, strode to the podium, to open the ceremony in prayer. I've only been able to find one link for a video of Dr. Thomas' prayer and its incomplete, but here are the highlights that caught my attention:

• Dr. Thomas started by asking everyone to join hands.
• He expressed his thanks to God for things we're all blessed with, as Americans.
• He asked for God's blessing of, protection of and guidance of the incoming President.
• He closed, "In the name of Your Son and our Savior."

"Faith & Family are my priorities." That's the statement I use, in beginning my Twitter Profile. Knowing that, offers understanding of why that prayer managed to break through my "auto-tune-out". Since my Twitter Profile goes on to describe me as "A Bleeding-Heart Conservative", that should, likewise, help provide understanding that I still wasn't drawn to join in the celebration. But it did help me gain perspective on how I can actually go about being "supportive of the Obama administration where I can". Surely, Obama had a hand in selecting Dr. Thomas to offer this opening-prayer. Just as there are many issues where I don't support Barack Obama, I might find that to be true of Dr. Thomas. But I support what Dr. Thomas lifted up in prayer and I support Barack Obama, in choosing Thomas for that role. I see this much the same as I did Obama's invitation to Pastor Rick Warren, to participate in the inauguration. That invitation and its acceptance, was criticized both from the Left and from the Right. Though I'm not a Rick Warren fan, per se, we're in fundamental agreement on doctrine so, I'm pleased to know that this will be a part of the inaugural ... especially considering the "Wright" choice that Obama might have made.

Though I do want to be "supportive of the Obama administration where I can" I'm not expecting to be found out in the public square in the near future singing Kumbaya with those who did vote for Obama. There are many issues where I'm in disagreement with our incoming President. None is more significant than our differences on abortion. When and if the Obama administration becomes proactive with their pro-abortion attitude, you can look for me to oppose that as strenuously as I know how. But, as a Conservative, I don't think we are doing our best for those who share our views or for our country, if opposition is all we put forward. I agree with U.S. Senator Lindsey Graham when he speaks against "playing Gotcha Politics" (though I don't think challenging the Geithner appointment necessarily falls into that category).

My hope with this, in general, is much the same as what I've stated in earlier posts - e.g., America's 21st Century Civil War. In that posting, I stated that, "Unfortunately, our nation has drifted away from ... a quality that made us great in the first place. Some think of it as Yankee ingenuity. I say its a greater strength that comes from the synergy of the best of our differing ideas." That's a perspective I want to maintain. Hearing Dr. Thomas' Prayer in Baltimore has helped me to do that. Whether or not you share my views, I recommend taking time to check out the video link I've highlighted above and then give some added thought to how you, as an individual, can add to that "greater strength".

The "Highly-Leveraged" Pay-Plan. A Right-Fit For The Tough Economy?

It seems that current economic conditions are resulting in more companies considering a more "highly-leveraged" pay-plan for their Sales force. Generally, this means a lowering of Base pay for a Sales person and an increase in the percentage of their potential Commission. As thoughts along these lines have been presented to me, they've often been accompanied by comments like, "A Sales person should eat what they kill, right?" That sort of argument can seem logical, at a gut-level, but it may not be the right approach for every circumstance and it certainly merits more thorough examination.


In order to give this topic a more complete look, I think it should be viewed in context - i.e., where does it fit in with the overall design of the pay-plan/commission-plan that's right for your company? Of course, the "right design" for a commission-plan is going to vary from company to company. So, in order to do this "more thorough examination", its necessary to come up with a "yardstick' that's good for general application. One that I came across some time ago, which I think suits this purpose as well as any, was an article in BNET called "Design a commission plan that drives sales - Sales Commissions". This article begins with a "Ground Rule" which seems like a great "yardstick" to start with on this topic. It says:

'* Start with the outcomes and behaviors you want to foster;"

Generally, as this topic has been raised with me, the only "outcome" receiving any attention is increasing revenues while reducing upfront investment. In one case, I met with a business owner who was targeting a 50% increase in annual revenues while planning to reduce the base pay of his Sales people by more than 50%. Of course, this is a pretty extreme example and it may just be a reflection of that company's financial position. However, this company's approach on this topic is similar to others I've encountered recently in as much as it only focuses on one desired "outcome" and it ignores desired "behaviors". Ironically, in most cases where this is coming up, its coming from business people who tend to view "typical Sales people" in the way I described in 'The Pride and Prejudice of Sales"- i.e., "a huckster" who is skilled at "palming off" some product or service. The true irony in this is that those very business people are adamant about not having that sort of behavior as a part of their company. It seems to me that their myopic perspective on this is more likely to produce behaviors they don't want while being unlikely to produce the revenue outcome they do want, at least not consistently and not in the long-term.

This isn't to say that there's no place for the "highly-leveraged" pay-plan/commission-plan. But, as with any commission-plan, it should be designed considering ALL the "outcomes and behaviors you want to foster." I think most Sales people also have the gut-level reaction to the statement, "A Sales person should eat what they kill, right?", that it seems logical. However, that's only going to hold up, if they feel a part of an organization where everyone "has some skin in the game." In the case of the business owner I mentioned who was targeting a 50% increase in annual revenues while planning to reduce the base pay of his Sales people by more than 50%, this was a complete disconnect with the company's pricing structure. That pricing structure is pretty standard ... a Customer is told what they'll get and at what price ... the Customer isn't allowed to pay more or less, depending on how they like what they end up with. Of course, any incentivized Sales compensation-plan won't completely map to that sort of pricing structure either. But, if I was on the receiving end of the pay-plan the business owner in question is contemplating, the gap between how I was getting paid and the way the business owner is getting paid would most certainly have a negative impact on my behavior, especially in terms of my feeling a part of that company.

So, what are your views on this? As always, we welcome you sharing your related views and experience for the benefit of others.

Comment

Liz Cobb, CEO Makana Solutions Says:


January 16, 2009 at 4:51 pm edit

Your most compelling argument here is related to one of my fundamental philosophies: “start with the outcomes and behaviors you want to foster”. My version of it is make sure your plan communicates what you intend for the salesperson to do, because it is the most powerful communications you have.



However, I cringe at the argument that the reason to lower base salaries is that “A Sales person should eat what they kill, right?”. The real reason, and everyone knows it, is that the business owner now needs to save the money to be more profitable. If they are doing it for their own benefit, that will be noticed. If they are doing it because our economy is going through hard times, the message can be told differently. By showing that lowering the base doesn’t mean you will make less money unless you produce less or by showing a higher reward for over performance, you are communicating a shared business goal and reward. We have several customers who have managed this successfully because of the very clear plan documents our system produced. Take a look. http://www.makanasolutions.com