Questions and answers from David Peterson's ask the expert forum.|
Topic: Sales Compensation vs.
My representatives are always
complaining about their commissions. Every month it's the same thing "My check
is wrong, you need to fix it now." All I can say is that I will have finance
take a look at it on Monday but I'm sure it is right.
We only change sales compensation
plans once a year but it's like... the sales representative don't know how much
they are being paid or what they are being paid on. Every commission check they
are mad and assume the commission check is wrong. Then they are so unmotivated
that the rest of their day, and definitely the rest of my day is ruined. How do
I fix this?
Sales compensation plans are
written specifically to be motivators of sales not de-motivators. The plans
do change often especially when the sales of an organization are growing
exponentially or decreasing at an increasing rate.
Sales compensation plans are also
used to promote specific products or specific activities within an
The rub with the compensation
plan is when the people who are closest to them don't understand how they
work or why they changed. Those people are specifically the people the
compensation plan is trying to motivate - the sales representatives.
The confusion typically happens
when the compensation plan is so large in terms of the number of products or
services it is trying to cover or the plan requires more than the calculator
found on a cell phone to figure out the amount to be paid.
That is the motivation... "How
much am I being paid." Let's face it the compensation plan is used to drive
sales, but the sales reps are trying to find out how much they make from
Here's my advice, hand your
compensation plan to a marketing manager or better yet hand it to your
spouse. Ask them, "if you sell x, y, and some of z how much will you make
next month?" If they can't figure it out then your plan is too complicated.
Your goal when writing
compensation plans is to motivate the employees to sell the items you want
sold. If your compensation plan is causing problems
then you need to go back to the drawing board - quickly. Don't
let this problem fester all year long. If it is festering then by definition
it can't be motivating.
Topic: Non Sales Activity
I have a sales rep that is the
hardest worker I have ever met. She sits at her desk all day. Rarely does she
get up, I think she even rations the number of bathroom breaks she takes. She
takes on every project that we ask of her and she completes all of the projects
in a timely manner and each project is better than the last.
My problem is that her sales are
starting to suffer so I have been slowly removing all of the extra activities.
This should have freed up her time but her sales have not been recovering and I
think that she is also a little disappointed in her performance. She used to be
#1 or at least in the top 3 every month. Any suggestions? I would hate to lose
You have probably guessed my
answer before you even read it... This is a sales management problem, you
caused this problem.
As sales departments get more and
more successful the demands from interdepartmental groups also begin to
increase. In other words the work that you, the sales manager used to take
on has increased to such a level that you have had to begin delegating some
of it to the sales staff.
Don't get me wrong I'm all for
delegation. And some of these projects need to be done. On top of that it
can be very rewarding for a sales rep to be asked and then given the time to
complete a project that is not related to their normal duties.
Probably what has happened in
this situation is that you took one of your very best reps and began giving
them additional work. The rationale was that even if her sales suffered a
little she would still be well over 100% every month.
rationale is correct until A: Your additional work actually becomes
her daily routine - this happens quickly and you typically don't notice it
until its too late. OR B: Your sales department
has been advancing so quickly that last year's 100% goals are this year's
75% goal - with fast growing sales departments this is very normal.
The ultimate answer is... Stop
taking on the additional work that is really not sales related. Push it to
sales support, or marketing, or even back on your boss. Only delegate
projects to your sales staff that will empower them and keep them motivated.
NEVER delegate busy work to your sales staff. Today's
A player becomes tomorrow's C player within a couple of months with that
As for this rep, start looking
for a new department for her. She needs a change. You ruined her with busy
work and you need to help her land on her feet. She can still sell, but she
will need a fresh start with a new motivation.
I am in the process of
finishing the yearly evaluations of my employees. 4 things frustrate me every
year: 1) I spend a LOT of time writing these evaluations. 2) My employees don't
read the evaluations and they don't take the time to make comments. 3) They
never agree or they look completely surprised at my rating. 4) They think their
merit raises should have been higher - in just about every case. How can I make
these evaluations go smoother?
I have dealt with this issue longer than I have been in sales. I can
remember back in my Navy days that my supervisor would give me my own
evaluation to write, then when the time came he would sit me down and
deliver that same evaluation that I wrote to me. At least you are taking the
time to do the evaluations correctly. Many organizations skip this step.
Here is how I would approach your problem. First and foremost throughout the
entire year you have to be preaching about the end-of-year (EOY)
evaluations. To overcome #1 "I spend a lot of
time..." This one is easy throughout the entire year make sure you are
writing coaching notes on your employees for every good and bad thing that
happens that way you have the material ready to be copied onto the
evaluations. To overcome #2 "My employees don't
read..." This one is harder, you can't make them read it or comment on it
but if throughout the year you stress the importance of the evaluations they
MAY pay more attention. I also use my perception of how they commented (bad
grammar, spelling, etc) in my evaluations, when you do that they will at
least try. To overcome #3 "They never agree..." This one is also easy - when you are writing
and delivering your coaching throughout the year give them the rating at
that moment and keep a running tab. Hand a copy of the coaching note with
the evaluation rating to the employee. They can no longer say they didn't
know how they rated, or what their rating should be.
To overcome #4 "They think their
merit..." This is my favorite issue and again it is easy to solve, as you go
throughout the year, in just about every team meeting you hold bring up the
subject as compared to how the company as a whole is doing and how
individual rep performance will be important. Using comments like "we have
to do better or our merit increases will be non-existent...," or "greater
individual sales performance leads to greater merit increases...." can be
very helpful in June, July, and August if you are delivering the evaluation
In case you didn't notice all of the solutions really deal with
communicating your expectations throughout the year.
You have to communicate with your employees if you want your
evaluation period to go smoother.