It's quite interesting to learn that a company is considering a change to the manner in which they compensate their salespeople. This typically occurs when a company has already discovered a flaw and management is hoping that a modification, usually in the form of more commissions and less salary, will motivate their sales force to find some new business.
The companies that are smart enough to first evaluate their sales force sometimes learn that their salespeople aren't money motivated. This really shouldn't come as much of a shock but it always does. If these people, currently paid by salary, were money motivated they wouldn't be working for a salary for this or any other company. What's worse, the company, believing that these people will enthusiastically prospect for new business once they have the proper incentive, risks losing these people when the compensation undergoes a radical change.
On the other side of the coin is this: are these people worth keeping? They don't grow the revenue, profit, customer base or market share. They don't help to grow the company. If compensating them differently will cause them to leave, should the company let them go? Perhaps! While the company may feel that some of these people have product, application or market expertise that can't be replaced, there are others that would certainly be worth trading in for salespeople who are focused on growth.
What happens to the company that executes their modified compensation program without first evaluating their sales force? Disappointment, morale problems, turnover, and most of all, a lack of the change that management was hoping to see. Does this mean that a change shouldn't take place? Not necessarily. It means that management should identify the real problem. Is it really the comp plan or is it the selection criteria? Could it be ineffective expectations, lack of accountability and coaching?
Complacency is the most obvious symptom when there is a lack of new business. But compensation is not always the reason. A comprehensive sales force evaluation will always uncover the problem behind the problem.
The companies that are smart enough to first evaluate their sales force sometimes learn that their salespeople aren't money motivated. This really shouldn't come as much of a shock but it always does. If these people, currently paid by salary, were money motivated they wouldn't be working for a salary for this or any other company. What's worse, the company, believing that these people will enthusiastically prospect for new business once they have the proper incentive, risks losing these people when the compensation undergoes a radical change.
On the other side of the coin is this: are these people worth keeping? They don't grow the revenue, profit, customer base or market share. They don't help to grow the company. If compensating them differently will cause them to leave, should the company let them go? Perhaps! While the company may feel that some of these people have product, application or market expertise that can't be replaced, there are others that would certainly be worth trading in for salespeople who are focused on growth.
What happens to the company that executes their modified compensation program without first evaluating their sales force? Disappointment, morale problems, turnover, and most of all, a lack of the change that management was hoping to see. Does this mean that a change shouldn't take place? Not necessarily. It means that management should identify the real problem. Is it really the comp plan or is it the selection criteria? Could it be ineffective expectations, lack of accountability and coaching?
Complacency is the most obvious symptom when there is a lack of new business. But compensation is not always the reason. A comprehensive sales force evaluation will always uncover the problem behind the problem.
(C) Copyright 2005 Objective Management Group, Inc.
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