Editor's Note: This week's Thought Leader is David Cichelli, Senior Vice President at the Alexander Group, the firm’s principal thought leader regarding sales effectiveness challenges and solutions as well as its sales compensation practice leader, and a nationally recognized expert in sales compensation. David is a frequent speaker, author and instructor on sales management issues; his book The Sales Growth Imperative is based on the Alexander Group’s experience working with successful sales entities, and his bestseller Compensating the Sales Force is now in its expanded and revised second 2010 edition. David also developed and teaches the one-day class on sales compensation for WorldatWork. He has a BA from Pennsylvania State University and a MS from Michigan State University. (Bottom line: there are few, if any, of us practicing in the area of sales compensation today who have not been influenced by David's writing, speaking and instruction.)
Compensation Force: What led you to choose (or land in) a career featuring the field of rewards?
David Cichelli: Workplace management is a subject rich for exploration by academics, practitioners and consultants alike. My undergraduate studies in industrial psychology provided one window into this world, but the science of human motivation left more questions un-answered than answered about the nature of effective management. The varied theories of human motivation could not fully explain the success of high versus of low performing organizations. My graduate program explored organization effectiveness models and again offering inconclusive and contradictory findings. Whether authored by economists, social scientists, or management pundits, the answer to the question, “What makes one organization more successful than another?” remains, to this day, unanswered.
Incentive compensation programs—specifically sales compensation—provides a ring-side seat to the application and outcome of various management regimes. Yet, the answer to “what works and why” still remains elusive. As a consultant, each client experience adds an additional note to this unfinished symphony of investigation. One thing my work has taught me for sure: Solutions are situational. No one factor can explain success or failure. No one program provides the answer. Instead, many forces interact together to produce observable results. These forces include the entity’s mission, leadership, management philosophy, motivation model, work culture, structure, supervisory practices, processes, and, of course, reward systems—both intrinsic and extrinsic. However, a simple yet stark example challenges even “safe” assumptions about reward programs. Most reward professionals assume sales compensation is a requirement for successful sales organizations. However, there are numerous examples of successful sales organizations that do not use or need sales compensation.
For me, looking at the variables of organization success and trying to configure a predictive model motivates my personal quest. From my perspective, no other reward program has such prominence, measurement integrity and clarity, as does the sales compensation program. It’s a wonderful vehicle to search for a unified theory of successful management.
Compensation Force: What person and their ideas/teaching/writing has had a significant influence on your thinking and your work?
David Cichelli: There are several leading theorists who have influenced my thinking and work throughout the years. In his book, The Structure of Scientific Revolutions (1962), Thomas Kuhn proposed that the advancement of scientific theorems was part frustration with the accepted ideas and part conjecture with what might be a better answer and not necessarily the result of pure and rigorous analytical investigation. Victor Vroom’s ground breaking work in human motivation in Work and Motivation (1964) illustrates one such disruptive paradigm. It upended conventional wisdom about employee behaviors by proposing a formula that employees use before acting. His Expectancy Theory frames an employee’s bias for constructive action by asking: “Can and should I do what’s requested, and what’s in it for me?” The web-site changingminds.org thankfully provides a concise yet comprehensive listing of such theories. It was Kuhn’s writings that encouraged me to search and document a conceptual framework for successful sales compensation designs. I present these cumulative principles in my book: Compensating the Sales Force.
But the most startling article for me was Larry Greiner’s noted Harvard Business Review classic: “The Evolution and Revolution as Organizations Grow,” published in 1972. Professor Greiner, in my opinion, correctly postulates that organization entities are organic institutions that must adopt situational practices to succeed. And paradoxically, management must displace successful practices as the company evolves. This sense of predictable movement is the key to the Alexander Group’s Sales Growth Model theory, which specifies sales management solutions by phase of growth. Geoffrey A. Moore’s books, Crossing the Chasm and Inside the Tornado, both articulate compelling environmental factors driving such changes. Fortunately, I have had a chance to advance my own thinking about the evolution of sales organizations in my recently published book: The Sales Growth Imperative.
Compensation Force: Is there a book you’d recommend to others in the reward field that has impacted your thinking and your work?
David Cichelli: For rewards professionals, the most compelling and confounding authors are those who do not believe in the use of incentives. Consider Alfi Kohn’s Punished by Rewards and more recently Daniel Pink’s Drive.
Compensation Force: Looking to the future, what trend or development do you think will significantly impact the reward profession and those of us working in it?
David Cichelli: Compensation is a headline-grabbing topic. In some instances, when abuses are untenable, legislative, regulatory or tax code changes will alter management’s discretion. Reward professionals should face these periodic “flare-ups” as normal and adopt new practices as required.
In a more systemic fashion, reward professionals need to develop a critical backbone that fully and carefully vets the latest compensation methods. It’s been said that HR and compensation professionals have more solutions than problems. My favorite question to ask when presented with a proposed compensation program is: “That’s the solution, what problem does it address?” Absent of critical thinking, we become the conduit for sometimes questionable management fads and certainly program proliferation. When asked to explain a program’s intent by articulating the problem first, most program authors realize their solution is often over-engineered or misapplied. A simple example illustrates the point: Some sales leaders want to tie sales reps’ sales compensation payments to completion of CRM (Customer Relationship Managements) software. Frankly, management should not use (waste) sales compensation dollars to enforce administrative compliance. That’s the role of supervisors.
Compensation Force: What are you currently working on?
David Cichelli: I’m delighted by the recent publication of my new book: The Sales Growth Imperative, McGraw-Hill 2010. This text outlines how the components of the Sales Management System™ must change through four different phases of revenue growth. This book joins the 2nd Edition of Compensating the Sales Force, also published by McGraw-Hill in 2010.
Recently, we have revisited various management theories. Our model, the “Management Compass” identifies eight distinct management approaches. Our working model specifies the correct HR and compensation programs that align with these eight approaches. Needless to say, it’s a work “in-process.”
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Our special thanks to David for participating in the Compensation Force Thought Leader series and taking the time to share some of his history, thoughts and ideas with us today!
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