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Why Must You Pay Sales People Commissions? (a16z.com)
An anonymous reader shares an article: Sales is highly competitive work. That word -- "competitive" -- is the key to a high-performing sales organization. In order to be great at sales, you must outsell the competition. The competition might be a product from another company; it might be an internal project at the target company; or it might be the undying desire of the target customer to do absolutely nothing, which is often the toughest competitor of them all. At the end of the day, it's all a fight. And how do you get the most fight out of an organization? By offering a prize. As the old boxing saying goes, "This is prize fighting. No prize, no fight." Prizes and competition are critical to building a healthy sales culture. So what's an unhealthy sales culture? One that's governed by politics. Sales people must sell into highly political environments to succeed and that's why they don't want to live in one. If you do not evaluate and pay on what sales people sell, then what do you evaluate and pay on? Getting along with others? Kissing the boss' butt? Talking a big game but delivering nothing? Sounds like politics and sales people instinctively know it. When a CEO says, "we're going to evaluate you on things consistent with the culture" the sales person hears: "we are going to toss out objective financial metrics for the subjective will of the king." Great entrepreneurs are great innovators, and innovators love to innovate. But before you innovate on sales compensation, make sure you understand the strengths of the old system.
When you hire someone to write code, they have no idea how much profit you are going to make off of them. Same thing when you pay someone to cook/wait/do carpentry/be a reception/ or do 90% of other jobs.
But when you pay someone to be a salesperson they know EXACTLY how much income they generate. It's not that hard to estimate how much profit they are earning for the company. This puts them in the single best employee/employer bargaining position.
So bosses HAVE to give sales commissions. Otherwise all the good salespeople quit and move to the competition who is willing to do it.
Salespeople have the best leverage, so they get the best deal. In exchange they have to give up safety. It's single most capitalistic employee job.
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So you subscribe to the 'if you build it, they will come' philosophy? Good luck with that.
How about we compare sales commissions to a common one in the US that is paying the waiters and waitress with tips? After all, the costumer is paying either directly through tips or through sales commissions. I imagine it will put a lot of stress not to have a steady income like I have. Also, I do not get hefty bonuses either.
Isn't it really just about motivation? Every role has different motivation. Some benefit from additional compensation. Think about bonuses for meeting certain goals, or for being utilized a certain percentage of the quarter, or make a certain number of sales. A good organization understands what motivates their employees and matches it to business needs. Would it be great if we could all just be paid a nice wage, do our jobs well, and go home? Sure. But there are people who will slack and do the absolute least, and there are people who will see a bonus/commission/etc as a great objective to shoot for.
Coming from an engineer background, I think we often harass sales people since they are the non-technical ones in our teams, but we all have our own version of this.
I will shred my adversaries. Pull their eyes out just enough to turn them towards their mewing, mutilated faces. Illyria
It's certainly a lot more beneficial to the customer in almost all situations...
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Sales commissions are used to breakdown moral conventions using greed. A person might not be willing to normally lie to a client or sell them some shit they don't need. But once they get used to the bonuses, they'll do anything to keep them coming in.
Most jobs give zero benefits for being good at what you do. Lousy or amazing, your monthly paycheck is identical.
“Peter Gibbons: The thing is, Bob, it's not that I'm lazy, it's that I just don't care.
Bob Porter: Don't... don't care?
Peter Gibbons: It's a problem of motivation, all right? Now if I work my ass off and Initech ships a few extra units, I don't see another dime; so where's the motivation? And here's something else, Bob: I have eight different bosses right now.
Bob Slydell: I beg your pardon?
Peter Gibbons: Eight bosses.
Bob Slydell: Eight?
Peter Gibbons: Eight, Bob. So that means that when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled; that, and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired. ”
I've got your "healthy sales culture" right here. Quantified. Metrics-based. Competitive. The textbook case!
Maybe we can compete to sell the anonymous submitter a fire to die in.
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