Employee Sales Bonuses

09:01 AM

"The essence is that when you remove the pressure of internal competition, then people perform a lot better. As a difference, I regard external competition as a challenge but not pressure." - BaldDog

What and how one defines and internalizes external factors and how these things effect behavior is an important consideration personally and with a sales team or individual. I've worked with people wired to respond to individual incentives for productivity as well as those not wired to that response - other things move them.

Removing internalized pressure is important and necessary for most people to be successful - my experience is in agreement with yours, BD.

Likewise, I've watched a team spirit illuminate a collection of people to achieve success and I've seen it not trigger that kind of response in other would-be teams.

I continually seek people who know what they want in the terms they want those things defined. "Team" is a term that is used inappropriately many times - a basketball team obviouisly functions in a team way differently than a track and field team. BUT highly motivated individuals on the same team or in the same unit can influence one another in a positive or negative way.

Long term commitment and personal growth is something I value highly and look for in people - super stars will come along as well as less productive but secure as well as team spirited individuals. I find all of that fascinating.

MitchM

Quote:

Originally Posted by OUTSource Sales

First off, Bald Dog, there are no "wrongs", so, you and I are throwing about views based upon our personal experiences in sales/sales management.

I think the other difference is that my sales experience is limited to selling various professional and consulting services, which means in most cases the sellers are the doers. What that means is the selling is only one aspect of competencies these people must have, and even that kind of selling of professional services is somewhat different from selling tangible things.

But having read your last post, I think our views are closer than we first thought.

BD

BD, I'm not sure that we're lock-step on this one. Simply put: I do not believe in the concept of "socialized commission". It goes against "every fibre" of a true SR.

Typically, when the team is commissioned, it is to brush-off (cover) an performance concern (eg. start-up, product launch, penetrating new geography/industry, etc.). The singular reason, here, is to defray potential downside of throwing people at the issue. I have also seen marketing debacles handled by altering commission for a specific (short) period.

I wonder if it concept of your sort of team commission program goes against the rules set-down by both IRS and RevCan? In both instances, the commission portion must be "at-risk" to the individual taxpayer.

Mitch seems to have hit the nail with his comment about having a of "team spirited individuals".

And, to clarify for the record, my offering has generally included PS but not delivery (we've always used individuals with specific talent to deliver).

Good luck & Good selling!
Pat

Hi Pat,

Quote:

Originally Posted by OUTSource Sales

I do not believe in the concept of "socialized commission". It goes against "every fibre" of a true SR.

Neither do I in general. I think one difference is that for your the smallest part of the sales force is the individual. For me it's the team.

I've also just found this blog entry that explains my approach.
http://chrismarston.blogspot.com/200...r-leading.html

And commission is a lagging indicator.

But indicators like...

Employee Happiness Index
Hand Written Card Index
Accounts in Pursuit

Are leading, predictive indicators.

As a sales manager, I can increase the Employee Happiness Index, so increase everyone's performance. I can create an environment in which people naturally want to learn and grow. Mediocre people naturally shape up or ship out, and they do it very quickly. In my experience, people who don't want to learn and grow hate the company of those who do.

Quote:

Originally Posted by OUTSource Sales

I wonder if it concept of your sort of team commission program goes against the rules set-down by both IRS and RevCan?

I don't think so.

Quote:

Originally Posted by OUTSource Sales

Mitch seems to have hit the nail with his comment about having a of "team spirited individuals".

Yes, but my thought is that individual compensation kills teamwork.

According to various stats, the annual attrition of sales folks is 43%. I don't know how much the commission structure contribute to this. But if I abolish the commission structure and pay sales folks the same way as the others are paid, I can reduce this number. At selling professional services, where clients have long-term relationships with their consultants (salespeople) this is vital.

But the tolerance for attrition may be higher in other industries where sales folks sell the stuff and move on to the next prospect. And my experience in those areas are pretty limited.

In the meantime, happy new year to you and all the other forum participants.

BD

BD, where, I acknowledge that we're not trying to "convert" one another, I'm hard pressed to avoid comment.

These threads tend to get off-the-rails with statistics when they're used like this, "According to various stats, the annual attrition of sales folks is 43%". The number means nothing because the source is not available, it doesn't specify which segment of SRs it portrays, and it isn't put into the perspective of the discussion topic (i.e. sales bonuses).

I'd much rather hear, "... in my experience, turnover has been...". In point of fact, in my personal experience, turnover NEVER been anywhere near that number (other than one "bag of razor blades" which I'd inherited). The point being that the implied turnover was based solely on lack of performance and was a management topic (not a function of the compensation).

As to my comments about IRS/REVCAN, don't be so sure. If I were you, I'd put the question to my accountant. If IRS were to do an audit on sales compensation programs, it is NOT a leap to have them interpret a diminished risk for team-based versus individual compensation. And, initiating a review of their treatment of such cases.

My experience runs the gamut in terms of length/complexity of both cycle and client relations. So, I'm not sure that I agree with the comment about, "... the tolerance for attrition may be higher in other industries". My point being that such attrition is seldom a function of the compensation.

On the balance of your post, I must admit that these indicator topics mean very little to me: I work so closely with the team that impersonal surveys and indices which, by definition, measure after-the-fact are impediments to strong relationships. It's been my experience that where peers were interested in such surveys of their teams, it was to diffuse an HR issue which they were suffering (i.e. the team has revolted and the SM is under the microscope).

This is my first post for 2008. I'm hoping to be able to continue throughout the year ...

Have a great one!

Good luck & Good selling!
Pat

	#11
MitchM	Motivation "The essence is that when you remove the pressure of internal competition, then people perform a lot better. As a difference, I regard external competition as a challenge but not pressure." - BaldDog What and how one defines and internalizes external factors and how these things effect behavior is an important consideration personally and with a sales team or individual. I've worked with people wired to respond to individual incentives for productivity as well as those not wired to that response - other things move them. Removing internalized pressure is important and necessary for most people to be successful - my experience is in agreement with yours, BD. Likewise, I've watched a team spirit illuminate a collection of people to achieve success and I've seen it not trigger that kind of response in other would-be teams. I continually seek people who know what they want in the terms they want those things defined. "Team" is a term that is used inappropriately many times - a basketball team obviouisly functions in a team way differently than a track and field team. BUT highly motivated individuals on the same team or in the same unit can influence one another in a positive or negative way. Long term commitment and personal growth is something I value highly and look for in people - super stars will come along as well as less productive but secure as well as team spirited individuals. I find all of that fascinating. MitchM Last edited by MitchM : 12-30-2007 at 09:01 AM. Reason: Add some words

	#13
OUTSource Sales "Top Sales Expert"	Socialized Commission BD, I'm not sure that we're lock-step on this one. Simply put: I do not believe in the concept of "socialized commission". It goes against "every fibre" of a true SR. Typically, when the team is commissioned, it is to brush-off (cover) an performance concern (eg. start-up, product launch, penetrating new geography/industry, etc.). The singular reason, here, is to defray potential downside of throwing people at the issue. I have also seen marketing debacles handled by altering commission for a specific (short) period. I wonder if it concept of your sort of team commission program goes against the rules set-down by both IRS and RevCan? In both instances, the commission portion must be "at-risk" to the individual taxpayer. Mitch seems to have hit the nail with his comment about having a of "team spirited individuals". And, to clarify for the record, my offering has generally included PS but not delivery (we've always used individuals with specific talent to deliver). Good luck & Good selling! Pat

	#15
OUTSource Sales "Top Sales Expert"	New Year Wrap on Topic BD, where, I acknowledge that we're not trying to "convert" one another, I'm hard pressed to avoid comment. These threads tend to get off-the-rails with statistics when they're used like this, "According to various stats, the annual attrition of sales folks is 43%". The number means nothing because the source is not available, it doesn't specify which segment of SRs it portrays, and it isn't put into the perspective of the discussion topic (i.e. sales bonuses). I'd much rather hear, "... in my experience, turnover has been...". In point of fact, in my personal experience, turnover NEVER been anywhere near that number (other than one "bag of razor blades" which I'd inherited). The point being that the implied turnover was based solely on lack of performance and was a management topic (not a function of the compensation). As to my comments about IRS/REVCAN, don't be so sure. If I were you, I'd put the question to my accountant. If IRS were to do an audit on sales compensation programs, it is NOT a leap to have them interpret a diminished risk for team-based versus individual compensation. And, initiating a review of their treatment of such cases. My experience runs the gamut in terms of length/complexity of both cycle and client relations. So, I'm not sure that I agree with the comment about, "... the tolerance for attrition may be higher in other industries". My point being that such attrition is seldom a function of the compensation. On the balance of your post, I must admit that these indicator topics mean very little to me: I work so closely with the team that impersonal surveys and indices which, by definition, measure after-the-fact are impediments to strong relationships. It's been my experience that where peers were interested in such surveys of their teams, it was to diffuse an HR issue which they were suffering (i.e. the team has revolted and the SM is under the microscope). This is my first post for 2008. I'm hoping to be able to continue throughout the year ... Have a great one! Good luck & Good selling! Pat

Employee Sales Bonuses

Business and Management