Can a Commission-Only Sales Compensation Plan still attract Good Talent?
Let’s assume that the product for sale represents value, and that a market exists.
This is a wise question, with the capacity to challenge the status quo – and let’s not confuse the status quo with best or empirical truth‘ Corporate systems are built for a particular hierarchical kind of control, based on the Industrial Era – which model is outdated and has considerable drawbacks. Evolution or transformation is overdue.
It is a mistake to think we can treat all roles as ‘equal.’ While inspired performances come by satisfaction in the job itself, the look and feel of excellence will vary by function. Let’s compare the functions in the business life cycle to children in a family…their names may be Ideas, Sales, Support, Administration and Management. Whilst the parents have an overall outcome in mind, the children each respond to different stimuli according to their perspective and values. In the same way a business outcome will succeed through the different functions all getting what they want.
A wise parent makes every one of her children her ‘favourite’. Likewise a wise manager will make every function (eg admin, sales, management) her ‘favourite’ (appreciating each one’s value to the whole) – knowing each responds to a different fuel. The fuel I speak of is different forms of appreciation, opportunities for excellence, different shaped remuneration and incentives. The ‘one size fits all’ approach might appear to work because you will get some results, but you’ve sacrificed the maximized potential you hired for. Try treating or rewarding a salesperson the same as an administrator and watch the results nosedive!
I think the question and context of having a good product, a real market, a plan with aggressive earnings/sale, even some warm leads, is very positive. The spotlight is being put on productivity. The old factory-style model (clock on/off, fill your quota, fill in time) is long out of date. Today’s world requires every person to be accountable and productive to the purpose of their role.
I was highly successful in the tough training ground of Direct Selling for over 20 years. In fact I raised my family, sent the kids to University, retired my husband on it and enjoyed annual international travel and several luxury cars. But from the start there were no retainers, no holiday or sick pay, no contracts to entrap, just a simple Agreement focussing on Ethics and Conduct. A strong commission and bonus system incentivized building a business of into a structure that would deliver strength and continued growth. Today’s corporate model could learn a lot from Direct Selling.
It was noticeable though when the parent company changed the balance of motivators from intrinsic (internal) to glorifying the extrinsic (externals) – how the inspired, sustained and low maintenance performances dropped! This was the part out of our control. The company changed reward structures to stimulate different purposes and I saw the wonderful intrinsic motivation I had known change to offering ‘carrots’ (short term, high maintenance). I was one of the last prime movers and high flyers to leave, and the company remnant a mere shadow of former glory and potential.
So, yes you can attract great talent on commission only. But this has to compensate for the risk and loyalty required of the salesperson. With longer term sales cycle, good talent should be respected with a retainer, possibly time-bound, to sustain them over the initial period. But what I am very strong about is…. ‘grow your own’ stars! Invest in the best potential and develop them. What you get is no baggage and profound loyalty to the company, and far more marketing than you could pay for. Great attitude plus Learning builds your own expert high flyers who will carve a name for the company long term.
The risk takers should always be rewarded generously, it must be regular and the company never default on a promise! The Sales function responds best to a certain type of fuel.
You will not get inspired performances from spoon feeding people or offering more carrots (and definitely not a stick). It is time to challenge current corporate Performance and Reward paradigms and models. I utterly believe people are designed magnificently to be productive, to excel, create and achieve. We respond powerfully to Autonomy, Mastery and Purpose in our jobs (Daniel Pink writes well on this in Drive). Yes much of our collective genius has been ‘forgotten’ but we can awaken it. The right rewards/fuel does this.
I conclude with the question: “Are your reward structures empowering your people to fulfil their potential (and therefore bank accounts) in a sustainable way?”