Today’s post is by Scott Broomfield, chief marketing officer at Xactly Corporation. Click here to listen to a recording of a recent Webinar, “Motivating a Multigenerational Sales Force,” hosted by Xactly and Selling Power.
Remember when you were a kid and got a weekly allowance for doing simple tasks, such as raking leaves in the front yard, making your bed, or helping your mom do the dishes? You knew that, to get your $10, you had to get your chores done.
Now imagine if you finished all your chores but received only $5. This would have limited your ability to buy candy, comics, or toys, not to mention make you resentful and question what you did wrong to receive less payment.
When a kid isn’t paid his or her allowance in full, no matter how sassy the kid gets, there are no major repercussions. When a rep is paid only half the bonus promised or an incorrect commission, you can bet there will be a multitude of repercussions.
One of these negative repercussions is a lack of engagement. Research shows that 18 percent of employees are actively disengaged in their work. Gallup estimates that these actively disengaged employees cost the United States between $450 billion to $550 billion each year in lost productivity. They are more likely to steal from their companies, negatively influence their co-workers, miss workdays, and drive away customers
Along with repercussions for your company, underpaying your salespeople affects their personal life. They depend on their paycheck to keep the fridge stocked, pay the mortgage, and keep the lights on at home. How long do you think a rep will stick around when his or her buddy says that those kinds of mistakes never happen at his organization? The answer: not for long. People want reliability, especially when it comes to compensation.
In addition to losing rock stars, there are many other consequences of an unreliable, manual incentive-compensation system. When reps don’t know what their commission will be, to what business win their check is related, or even when it’s coming, what you have is a reward system, not an incentive one. So what’s the difference? An incentive system sets specific goals wherein salespeople know that if they perform X, they will receive $Y. This is much more effective in inspiring the behavior you want from reps than a reward system, which generally just gives reps a check that is not tied to any specific behavior.
When you have an automated incentive-compensation system, reps have visibility into their attainment metrics throughout the entire quarter, instead of waiting to be handed a report a few days before the check is cut. With this kind of transparency, employees are able to see just how many deals they need to bring in to make quota and exactly what their quota attainment will be if they make their numbers – no guessing and no time-wasting disputes.
The kids in the featured video know instinctively that being underpaid is wrong. They know that getting accurate payment is fair, and they know that they would be unhappy and “sassy” if they weren’t compensated properly for their hard work. If a group of elementary school students are aware that doing chores and then being paid incorrectly will negatively affect their behavior, don’t underestimate your sales reps’ reactions to incorrect payment. No one likes a sassy rep. Well-paid reps are happy reps, and happy reps are more likely to perform at the peak of their ability.
Click here to listen to a recording of a recent Webinar, “Motivating a Multigenerational Sales Force,” hosted by Xactly and Selling Power.