Sales People ARE Different, But Not Every Sales Problem is a Sales Incentive Problem

While there is movement toward a broader and more encompassing definition of employee rewards underway, it doesn't appear that the concept has gained much traction in the sales compensation arena.

Should it?

Experience and research has shown us that sales people are different.  Study results released a couple of years ago by Sibson Consulting confirmed that sales employees are more motivated by compensation than non-sales employees (82% versus 62%).  They also tend to be more engaged (57% versus 51%), more committed to their employers (68% versus 62%) and have higher career satisfaction (57% versus 52%).  I would hypothesize that at least part of these findings can be attributed to the highly leveraged and performance-based compensation programs in place for most sales employees, where cash rewards are tied very clearly and directly to sales results achieved.

So, we don't want to mess with that, right?

Mostly, yes. But neither do we want to over-rely on cash as the only tool available to manage sales people and sales results.  Our propensity for treating all sales problems as sales incentive problems shows how easy it is to fall into that trap.  And the consequence of landing there can be overly complicated (and ultimately ineffective) sales compensation plans loaded up with too many measures and mechanics.

Using one of the visuals I am so fond of, the problem can look like this:

 
So we end up leaning on only a couple (albeit very powerful) tools and rewards to drive sales behaviors while overlooking the other "levers" we have available.

I think there is a place for a total rewards conversation in all sales compensation design efforts.  To keep the focus exclusively on sales incentives is to miss the opportunity to throw a larger arsenal at our sales problems.

And who, these days, can afford to do that?

Comments

[Dan McCarthy]

Ann –
Great post. I love your chart too.
I’m not surprised the first two levers on the list (in order of impact?) are management.

[Ann Bares]

Dan:

Thanks for stopping by - glad that you like the chart! Yes - it is no accident that the first two levers on the list are management-related!

[Chris Young]

Nice post Ann! There is definitely an over reliance on cash incentives as motivation in the sales field. I find that using a validated values assessment can be a big help in better understanding what motivates an individual sales rep.

I have included your post in my top five blog picks of the week to get my readers thinking about how they are motivating their sales force.

Be well!

[Chris Chittero]

Excellent summary! I've seen companies invest good time and money to design and teach their sales methodologies (the top of your first column), but then do nothing in performance management or incentives to monitor and reward the process. So at the heart of the matter is a question companies really need to ask themselves: "Do we genuinely care how our sales people deliver their numbers?"

Issues like this are where the Compensation, OD and Training disciplines should align themselves.

[joe charles]

Your thoughts are spot on Ann. Those in sales need more than tweaks to compensation plans for sustain top performance.

[Kim Bechtel]

I really enjoy this blog. I have used a number of the blog posts as references for my clients. Spot on regarding sales people and incentives. Thanks for the very clear thinking on compensation and for sharing with the rest of us!

[Ann Bares]

Chris Y:

Hey - thanks, always, for the feature in your top five. Always an honor to get the shout!

Chris C:

You're right - there is a lot of opportunity for cross-functional collaboration in developing and refining "total rewards" for salespeople.

Joe:

Agreed - and yet it's tough to unlearn our knee-jerk reaction to treat everything via comp plan tweaks, isn't it?

Kim:

How great that you're finding it useful - thanks for letting me know.

Appreciate the thoughts and comments, all!