Great article from Yahoo Finance. I think I have worked with some salespeople in the past who had this same compensation program: Anthony Armatys is facing up to six years in prison for his dumb move. But he’s not the only dummy in this story. Armatys accepted a job in 2002 with telecom equipment maker Avaya but then changed his mind before he started. He was already in the payroll system however, and the company started depositing his six-figure salary into his checking account. For five years, Armatys did not notify Avaya of its error, but his attempt to make an early withdrawal from his 401(k) prompted an investigation that… Read More
Continue ReadingPreset For Mediocrity
SellingPower.com’s article deals with something we have seen throughout our many years of sales assessing, hiring and coaching – financial comfort zones. Here is a good explanation of it from the article (emphasis mine): Eker stumbled on the concept of financial blueprints while running his first company, a fitness business. In that business, his trainers often referred to a body’s “set point,” or the metabolic rate at which a body is comfortable. Eker, looking back over his financial history one day, realized that again and again he followed the same financial pattern of making a lot of money and then losing it. Up and down, up and down for fifteen… Read More
Continue ReadingCompensation Consternation
I know, lame title, but I couldn’t resist. ManageSmarter.com offers up this article – Compensation Complexity Hinders Sales – regarding current compensation plans. Here are some numbers they quote within the article (my editing): Only 41% of sales leaders were satisfied with their current compensation plans (down from 59% two years prior), and only 46% believed their plans were promoting the correct behaviors for sales success. Nearly half (46%) of sales force leaders believe their sales compensation programs have become more complex since 2006. I always found the compensation plans to be more “complex” when I wasn’t at quota. Successful selling definitely alleviates many problems. But there is this: The… Read More
Continue ReadingA Fundamental Lack Of Communication
The more companies we work with, the more we see communication breakdowns being the root of most problems. Our work with our clients spans more than just recruiting. We assist them in onramping their new salesperson. This function places us in the unique position of working with both the salesperson and the sales manager. One of the more dysfunctional situations we encounter is a communication breakdown between the manager and salesperson. One manager complained that the salesperson wasn’t doing what he asked, but he never confronted the salesperson. Another time we had a salesperson who would not submit his weekly call report. Ever. Yes, he was let go (even we… Read More
Continue ReadingSales Retention Through Compensation
Commission-only sales plans are risky in my opinion. I know they are the truest form of selling – you eat what you kill. I simply think that many salespeople view this structure as a lack of commitment from the company. I’m not saying that is accurate, but I have talked to many salespeople under these plans and this is their perception. Fortune Small Business discusses this topic in their article Why to be wary of commission-only sales staff: “If you hire someone and you’re not really willing to invest time and resources in them – and that’s really what a commission-only sales person suggests – then you’re missing an opportunity,”… Read More
Continue ReadingCompensation In A Task-Based Economy
Now this is a provocative article from BusinessWeek.com titled Defining A Job. The article is quite thorough in it’s reasoning and well worth the read. But let’s start with this explanation: In a nutshell: how do you define a job? For most organizations today, it’s based on the unit of time—40 hours week, for example—but I believe that definition is rapidly reaching the end of its useful life. Going forward, many jobs in our economy will be better defined by and compensated according to the task performed, regardless of the time spent achieving the desired outcome. Ironically, the switch from time to task takes us back to the way most… Read More
Continue ReadingThe Social Salesforce
Salespeople are motivated by many factors, but the primary, most common motivation is Utilitarianism. The drive is for a return on investment. Most people first think of money which is a good example, but it is bigger than that. It involves a return on time, effort, energy, resources, etc. 72% of the top salespeople in any market or company are motivated by Utilitarianism. Now imagine a salesforce that is not compensated in some manner by commission – a group with a strong Social motivation. You would then have this story from the Boston Globe – A noncommissioned sales force? You’re crazy: What is it that Little, vice president of sales… Read More
Continue ReadingCompensation – Keep It Simple
Every year we find December to be a fertile time for sourcing salespeople. One of the biggest reasons – the upcoming year’s compensation plan. More specifically, new commission plans tied to new quotas. The salespeople receive the new plan and are, well, disgruntled. Or ticked off. Good salespeople tend to look outside for new opportunities when their commission plan gets over-adjusted following a strong year. Let me speak clearly here – I am all for raising the bar, but you do have to take all factors into account before setting the new targets. ManageSmarter.com offers up this article – Fast Track Your 2008 Sales Compensation Plans – with 10 tips… Read More
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