Are Managers Using the Wrong Incentives With Their Salespeople?

The way to improve performance, increase productivity and encourage excellence is to reward the good and punish the bad. This is the assumption that too many organisations have based their decisions on throughout the last century and in the first decade and a half of this century.

Sometimes this carrot and stick approach works but many times it doesn't. So what do you need to do, raise the rewards and get tougher on the punishments?

As I write this, I have in mind two sections of industry that use this almost to an extreme. One is the new homes market, the other is the motor vehicle trade. A lot gets written about the motor vehicle trade and the pressure put on salespeople to meet their quotas but far less is said about people management in the new homes sector so I'll use them as my example.

It amazes me that people with the skills and knowledge to build beautiful new homes are such pathetically poor managers of people who have clearly never heard of the '3 Dimensions of Job Satisfaction'. I'm sure there are exceptions, but they are definitely in the minority and the industry has a culture that breeds fear of failure and survival of the fittest amongst its salesforce. This leaves little room for a customer focussed approach where the joy of helping the customer select the right house for them that is in the right location at the right price is in itself fulfilment.

They reward the high performers with excellent commissions, huge bonuses, overseas trips and sales awards. For those who fail to meet their targets, who are viewed as 'burning leads', as being 'poor closers' there is the threat of dismissal. So, what happens? Fear sets in. It affects their confidence, clouds their thinking, tempts them to take shortcuts and they end up being fired... even though they may have been the ones picking up the awards and bonuses six months before.

The strange thing is that these companies design and construct great houses, using excellent systems and wouldn't dream of taking shortcuts in the building process. Yet their assumptions about how to motivate and incentivise people make life difficult for them as managers, create a fearful work culture and cause ongoing problems.

It's time that managers questioned their assumptions about how to motivate people and looked at alternative approaches. Until managers learn to be a coach reinforcing the positive behaviours with praise and helping their team to work through problems, they will constantly be under pressure and will infect their sales team with a fear of failure.