01-03-2017 11:42 PM
Many of us have likely always accepted that commissions are an inherent part of working in sales, and that will always be the case because they are the best way to motivate salespeople. But what if that isn't necessarily true? This great read from Harvard Business Review forces us to think about the psychology involved in motivation at work, why commissions may not always be the best option for every company, and why they may even cause more harm than good.
Read the article and let us know what you think! Have you ever worked a sales job somewhere that didn't offer commissions, and, if so, how did that experience compare to jobs that were commission-based?
01-23-2017 03:18 PM
Super interesting article, and I think there's a lot to be said for a commission-less sales force. I have worked in everything from a commission only sales job, to a sales job where only my bonus was based off of my sales.
I think there are a couple of reasons that the companies in the article found more success after scrapping the traditional commission based sales culture. The first reason is the stress reduction. Especially when starting in a new industry, commission based sales people are constantly stressed on hitting their numbers, because if they don't, they don't get paid. I know that my stress level was much lower when I switched to a sales role without a commission.
Secondly, I think that the team mentality kicks in as well. In the article, the companies have a pay structure that is 90% salary, 10% company-based initiatives and growth. This means that everyone is responsible for the group's pay, because everyone is participating in growing the company. I think this also leads into a stronger work culture, as opposed to the competitive issues that sometimes pop up in the traditional sales culture.
The biggest question: why aren't more companies switching to these kinds of plans? The salespeople of today have to work much differently than the sales people of 20-30 years ago, why are the compensation plans not changing along with them?
08-02-2017 08:01 AM
I wasn't able to read the article (there is no link to it), but just like @JadedMoney14, I have worked in sales jobs that range from 100% commission to 0% commissions.
I can honestly say that I do much better in roles where there are either no commission, or a very small commission on new capital sales only, with annual bonuses based on a combination of individual and overall company performance. Part of the reason, as already stated, is that there is no stress about not getting a paycheck.
The other part is that I believe that your sales technique and personal demeanor are much more relaxed with the customers and you are not trying to push or force the sale to happen. Having been on the other side of the table also, I can tell you that pushy salespeople turn off the customers and reflect poorly on their companies. A more laid back and relaxed consultative style has always worked far better for me.
If the salesforce is secure in the knowledge that their bills will get paid and their families looked after, then they can focus more on their jobs and actually perform better.