If you are trying to increase the number of reps you hire and train, here’s the easiest way to clear out your top performers. Be inconsistent. Particularly with compensation issues, territory planning, goal setting, and promotions. Those pesky senior employees will be out of your hair and you can start over again and again.
On second thought, maybe the best way to run things is with consistency. It is one of my seven “One Hour Sales Manager” principles. Take a journey back to your childhood for a second. Pretend your mother reprimands you for leaving toys in the living room. You cleverly respond, “Those aren’t mine, they’re Sally’s.” She says, “YOU left them there, put them away NOW.” A rule of law was just established. The next time Sally plays with your toys and leaves them out, you know the rule and you leave them for her to clean up. When the same argument ensues Mother says, “They’re YOUR things, put them away NOW.” Is there anything that makes you angrier as a kid than feeling like the boss isn’t playing by her own rules? People never outgrow a distaste for trying to hit a moving target.
Here’s how that looks in sales organizations. A new Sales VP decides to institute a President’s Club and offers a $2500 bonus for all reps over 120% to goal. A few weeks before the following year closes, she realizes she doesn’t have the budget to bonus all the reps heading for 120%. She decides to raise the criteria to performance of 130% or more, and on Awards Night 2 reps still get the President’s Club honor and the cash. The criteria was never technically announced for the current year, so how could anyone complain? (Besides everyone.)
You swear you will never do anything like that. Really? Is your compensation plan in writing and how long has it been in place? Does it contain the words “management discretion?” Did you release your compensation plan before it took effect or was there some period of retroactivity? Is your policy for awarding credit for every sale documented? Is it clear who receives credit and commission for every sale or is there some gray area? What happens if a customer requests a refund? What happens if a rep is on disability when a sales they started comes in? How’s your discount policy structured?
From crediting and commission, to promotions and titles, to price negotiations and customer support, there are a lot of moving parts to a sales organization – even a small one – that require a sales leader’s referee whistle. The NFL has a rule book and you need one to. And just because you are the boss and CAN bend the rules, doesn’t mean you should. I didn’t say you should never change the rules, because you should when you realize you can increase the quality, speed and effectiveness of your business. Consistency doesn’t mean never changing, it means following decision-making rules.
Here are ways to become more consistent:
1. Be timely. Plan ahead and give advance notice for any policy affecting rep compensation, job description or pricing. Institute a standard date such as the beginning of your fiscal year to publish all updated policies at once. Deliver goals and the year’s compensation plan BEFORE they take effect.
2. Test it. Ask someone analytical on your team to help you think up scenarios, typical and atypical, you can use to model your policy. Pressure-test your policy against each scenario to see if the outcome is what you intended.
3. Seek input. I am not recommending a pure democracy, but asking your senior staff to comment on these important rules of law will challenge your personal perspective. You’re not “campaigning” for the policy, so don’t try to sell them. Listen to their comments with an open mind.
4. Put it in writing. That’s more for YOU and your finance guy than your team. Reps have an uncanny ability to remember rules that affect their compensation, but funny how when a whale of a sale comes in the finance team will ask you if we really have to pay that huge commission.
5. Live by it. I shouldn’t even have to list that but guess what? I see managers break their own rules to suit what they call “unforeseen circumstances” all the time. You will break your reps’ loyalty along with it.
6. Evolution not Revolution. Try to leave policies alone as much as your business can afford to do so. When change must come, consider a two or three month transitional period before a new plan takes effect. Reps will sell hard to bring in orders under the wire! When you do institute a change that makes attaining high commissions less attainable, be sure to point out what reps are getting in exchange such as added products, client support, or marketing. They’ll understand that you’re trying to build a business where they can succeed today and in the long run!