Motivated by Achievement and Stimulated by Compensation

Following on from yesterday’s post – “Our Research Indicates …” in which I took issue with an article by Messrs Adamson, Dixon and Toman of CEB, today I want to tackle another point raised in that same piece of work, Why Individuals No Longer Rule on Sales Teams

I quote ….

“As organizations have begun to see the benefits of collaboration, they’ve also, unsurprisingly, started to change their sales incentives and reward systems. For instance, the sales function at Microchip, a global leader in semiconductors, has jettisoned the traditional highly leveraged variable comp plans based on individual performance. Instead, it’s taking an approach that looks strikingly similar to what you’d find elsewhere in the company: competitive base salaries coupled with a small variable component based on company and unit performance. The results? Record growth and profitability, increased rep engagement, and near-zero attrition.”

To be fair, the authors do not really make a case, but they simply illustrate what one company is putting into practice, and suggest that we all might follow. I beg to differ. From experience, I know that flat compensation plans do not work, because the reality is, as Orwell says in Animal Farm “All animals are equal but some animals are more equal than others”  That is to say, in any sales team – in fact in any sort of team – there will be high achievers, low achievers, and what I term “plodders”

By rewarding them all in the same way, simply retards the high achievers and masks – or over-rewards – under achievement. The plodders, will usually perform to the same standard or level, however you compensate them. But we should not devalue this last group, because they deliver consistently, if never spectacularly.

As managers, our task is to elicit the maximum output from every single member of our team and achieve optimum performance, and we can only do this by understanding that they are all individuals, and each of them is motivated differently. A “one-size fits all” approach is simply not good enough, and frankly, is a cop-out at best, and negligent at worst.

Over the past 30 years, I have spoken, and indeed written an awful lot about the 8 key motivating factors, and again, they are, in no particular order …

• Relationship with manager
• Responsibility
• Promotion
• Acceptance by peer group
• Job content
• Financial motives
• Recognition and praise
• Achievement

For motivation, you can read “attitude” – how critical is the right attitude? Within my formula: Attitude + Skills + Process + Knowledge = Success, attitude is fundamental to any achievement, because individuals with the right attitude are far more likely to embrace the essential skills, recognize the control that process brings and have the desire to continually expand their knowledge.

Let me end today’s post by dispelling a common myth. The most successful frontline sales professionals on the planet are NOT motivated by financial reward, but rather by achievement. They understand, that in the right environment, that achievement will be appropriately rewarded, so we can say with total confidence, today’s sales superstars are ” Motivated by Achievement and Stimulated by Compensation”

Comments

  1. says

    Amen. I couldn’t agree with you more Jonathan. You described the intrinsically motivated salesperson. At OMG we are seeing that proven out with recent data from sales assessments and evaluations. Pre 2008, 54% of all salespeople were extrinsically motivated (compensation) while in 2013 that number shrunk to just 27%! Another way of viewing the motivation factor is by asking the question, “Do you love to win or hate to lose?” And while it doesn’t matter which answer a salesperson chooses, how they are motivated is all about that answer. Keep these great posts coming.

  2. says

    Spot on, Jonathan. In theory, putting everyone on the same plan seems to make sense. You’d like to believe that everyone will step up and do the right thing. It NEVER happens.

    I remember when my sales compensation was part salary, part commission based on my own performance and a decent sized percentage earned based on team performance. Goal is to motivate everyone to help each other for the good of the team, but as you aptly point out, that isn’t how it plays out in real life. As a manager, I got sick of hearing my reps complain about those reps not doing their job but still earning a chuck of commission based on the work of others.

    Finally, I was (and am) always first motivated by achievement. I agree with you that most good sales people are. And…I also loved knowing that if I worked harder than others and closed more deals, I earned more, won more trips, etc. Money didn’t drive me but it always made me happy to know my hard work paid off.

  3. says

    Yes Barb, that is exactly how it should be: The more successful we are, the more rewarded we get – however those rewards arrive. It is a basic principal of life.

    The most successful people I know, have worked incredibly hard to achieve that success – it isn’t easy, if it were, everyone would be successful. But you know, anyone can be successful, if they want it badly enough, and they are prepared to make the sacrifices.

  4. says

    Jonathan, This is a very interesting post. My impression is that the CEB authors may have fallen into the Hammer/Nail trap ‘if the only tool you have is a hammer, then every problem starts to look like a nail’. The example cited is too narrow and their conclusion too broad. Dan Pink has an interesting perspective on this and has written on this topic quite a bit as well.

    I worked for years in the Semiconductor industry and it is an interesting market indeed. This market is focused on design wins where the sales rep may ‘close the deal’ (get a design win) but the actual revenue for this win may occur years later in factories half way across the globe. It is very strategic account focused with long sales cycles that depend heavily on leading cross functional sales and technical support teams through the evaluation and qualification process. The Sales professional in this market tends to be a cross functional team leader with the patience and persistence that fits more of a farmer than hunter sales role.

    In short, it is one where sales compensation plans whose pay mix tends to be weighted towards a larger proportion of base pay (80/20, 90/10), less frequent payouts and performance measures which are team based almost out of necessity. Any plan design at Microchip which was highly leveraged (high variable pay ratio such as 50/50, 60/40) is probably one that is out of step with the realities of the market and ripe for improvement.

    Your comments regarding applying a broad brush to all comp plans based on this example are spot on. I do find sales comp to be very situational with a primary requirement to be flexible and open minded about motivation, rewards and performance feedback. BTW: I really like your catch phrase!

  5. says

    Hi Jerry,

    Thanks for commenting. Obviously I do not have your considerable experience in compensation planning, mine is drawn from trial and error with teams of all sizes. I got it wrong as often as I got it right, but I learned the lessons!

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