Stop Demoralising High Achievers

Was a little saddened this morning to learn of a terrific rep and all-round good-guy leaving one of my customers.  After ten years in his present environment, the family man is moving elsewhere in the global group.

The reason for his move should help sales management check their incentive approaches.  Every year he has hit his budget.  It was a real scrape for him last time out, but he knuckled down and made it to 107% on the last day.  Yet the price he had to pay was, he felt, too high.  No proper family holiday, Sunday’s with work spread on the dining room table and no extra cash for success.

The issue for him was that each year you hit target, your basic goes up an extra 2½%.  All good, yet the following target rises.  Nothing unusual in that you might think, but no extra commission comes your way for hitting the higher number.

This got him to the stage where he was selling a full 50% more than other reps (400k margin vs 600k) yet was actually earning less bonus than them on individual sales, as everyone’s OTE was the same rate.  This meant that for the same say 20k deal, he’d earn 1.6k, whereas someone else could trouser 2k.  Why over the course of a year should he sell half as much again as others but only earn the same bonus?  Despite his massive loyalty, he eventually had enough when 2008’s commission plan came out and he got a 20% increase in his target.

With retention of stars a critical sales management issue at present this could be a timely reminder for some of us.