A better way to motivate

Sometimes it’s really good to question a convention. Such as: the best way to motivate sales people is to offer them commissions.

Is it really? Some companies have begun to discover that it’s not true. To the surprise of many, these firms are showing that commissions can sometimes do more harm than good – and that getting rid of them can open a path to higher profits.

And scientific research on human motivation backs it up. For the past 30 years, a group of social scientists around the world have come up with a more complex view of what motivates people in a variety of settings, including work.

One of their findings is that the effectiveness of things that motivate you varies with the task. In particular, they have discovered that the reward system works well with routine tasks like stuffing envelopes quickly or turning the same screw the same way on an assembly line. The promise of a reward, especially cash, excites your attention, and you focus on getting the job done.

But those same rewards turn out to be far less effective for complex, creative, conceptual activities. Like inventing a new product or working with a client to tackle a problem neither of you has confronted before. For those projects, you need a broader perspective, which, research shows, can be inhibited by rewards.

Which brings us back to your sales team. In the middle of the last century, selling was fairly simple. Memorise your script, open your sample case a certain way, give standard responses to predictable objections—and do it over and over again until the law of averages works in your favour.

Today, though, the transactional aspects of sales are disappearing. When routine functions can be automated, and when customers and prospects often have as much data as the sales executives, the skills that matter most are different: holding and interpreting information instead of merely dispensing it, identifying new problems along with solving established ones and selling insights rather than items.

It seems that doing this, with a commission-free system and rewards based on company success, results in sales increase without any increase in the cost.

Last year even a stalwart like GlaxoSmithKline joined the club, scrapping commissions for its fleet of U.S. pharmaceutical reps.

Should every company forswear sales commissions? No. But simply challenging this orthodoxy helps us recognise that selling today is sophisticated, complex work – and that the people doing it therefore require incentives beyond a dangled carrot.

Thanks to Daniel H. Pink, author of four books about the changing world of work.

Call us on 01865 881056 or email us at info@leaderslab.co.uk if you’d like to discuss this further.