Sales Compensaton: Which Rewards Really Motivate?

Sales Compensation“Sell like you don’t need the money”

Ever wonder why this simple advice is still in use no matter how complex or how transactional the sale? I’ve taught it in basic sales training and utilized it throughout my sales career.  The behavioral economics research* cited in Daniel Pink’s book “Drive” refutes the basic premise that higher rewards equal higher performance.

“In 8 of 9 tasks, higher incentives led to worse performance…Rewards can cloud thinking, narrow focus and inhibit creativity”

Implications for incentive compensation

A straightforward compensation plan that rewards sales people for the direct results of their actions is never going out of style. Cash compensation needs to be market competitive with upside for top performers.  However, artificially high contingent rewards such as a SPIF or big deal bonuses may actually make it more difficult to find that elusive win-win solution during an intense negotiation.  Being too focused on the reward could be the culprit when you have only a split-second to respond to a decision maker’s objection or come up with the creative idea that moves the deal forward.

People love to be recognized, so recognize them. The very best long-term enhancement to the incentive compensation plan remains a personal phone call from an executive with a simple, sincere message…

Thank you for the outstanding effort.

 

Resources:

Video: Drive: The surprising truth about what motivates us by Daniel Pink

Collaborate with Neal on your 2014 Sales Compensation Plan

*Reference: Dan Ariely et al “Large Stakes and Big Mistakes” and “What’s the Value of a Big Bonus?”


About Neal Murphy

Neal Murphy is the publisher of Enterprise Sales Operations and former VP of Worldwide Sales & Operations with 20 years experience in enterprise technology.

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