Page 65 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Unit 3: Motivating and Compensating the Sales Force

Notes
Compensation
Looking at the reconstructed figure, one can see fairly quickly why financial compensation
alone is not sufficient to explain the motivations at work in a sales workforce. Financial
compensation – though not, strictly speaking, a physiological need – is analogous to the
lowest tier of needs in Maslow's hierarchy. It is basic and important, but it touches upon
only one dimension of motivation, and a comparatively low-level one at that.
Caremark's Joyner sees it this way: "Salespersons in general have more needs than simply
getting a paycheck. That is part of the reward, certainly, but once you have a fair
compensation plan in place, then the real work of employee motivation begins." In other
words, the carrot-and-stick approach – dangling financial rewards in front of a sales
force – does not work very well once a person has reached an adequate income level and
is motivated primarily by higher needs.

Trust
Above physiological needs on Maslow's hierarchy is the human need for safety and security.
In a sales context, this need can also be understood as one involving the level of trust a
sales force has in how it is treated and compensated.
Trust is a difficult thing to establish within a sales organization when it comes to the
complex and ever-changing calculation of commissions. The story of Canadian
telecommunications company Telus Corp. is instructive in this context. Telus was suffering
from the effects of inconsistent and manually intensive incentive management processes,
dependent on multiple data sources that have little or nothing in the way of audit trails
and traceability. As a consequence, the company's salespeople were very skeptical about
how their compensation was determined: Without reliable, detailed reporting on
commission payments, the compensation system was a "black box" as far as the sales force
was concerned.
When trust is absent, sales professionals generally respond by creating their own
individualized shadow accounting processes – most often an automated spreadsheet or
other tool they use to verify the accuracy of their paychecks and incentive payouts. While
it might seem that no harm is done with such a process, in fact it can be a drain on
performance and productivity. Estimates of productive selling time lost to shadow
accounting activities can range from one-half day to two days per month per salesperson.
As Nortel's Joannou notes, "Decreasing the amount of time a salesperson spends on
non-sales activities is critically important to raising overall productivity. Every minute
spent by a salesperson verifying compensation data is one less minute available to meet
with customers and close deals."
What can be done? In Telus's case, the company adopted a holistic enterprise incentive
management solution driven by next-generation technologies to improve the level of
trust, and to more closely align sales force behavior with not only the company's sales
strategy but also its overall corporate strategy. When Telus implemented its new incentive
management system, the trust level in its sales force grew.
Two years after the system's deployment, the average time spent by salespeople on shadow
accounting activities dropped from 40 hours per month to 5 hours per month. The company's
sales team recouped 17,730 days of additional selling time during the first year of
deployment and 52,500 days the second year.

Contd...

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