I grew up as a young man an Employee in computer sales, striking my first marks in the days just prior to the introduction of the PC.   Shortly after, enticed by the potential, I joined a ComputerLand franchise owner as Sales Manager and opened one of the first computer stores.   The next few years were heady days of fast growth in an industry in its infancy.   The franchisor and my franchisee though had resisted change in the first evolutionary steps, and in 1984 I moved to the more aggressive format offered by a regional company-owned chain.  

There I took over a store and transformed it in my own image, and it went from last place to first in sales within 90 days.   Amazing what a little training, motivation and common sense can do at the hands of an energetic young man.   But this story is not about my path, but about this environment as a little fish bowl of a laboratory of human behavior.

Now I’ve often said that working in the computer industry the past 25 years or so has been a bit like living in dog years.   The pace of change has been unlike any other.   Product lifecycles are measured in months.   It’s maddening sometimes, but it is a great training ground.

Well, the President of this growing $100M computer reseller embarked on this personal experiment as he tried to motivate his young sales force to accomplish his business targets.   He was a smart man and a very hands-on sort, though he had never had run a sales operation of this size before and was clearly learning this as he went.

What he inflicted on the organization in the twelve-month period after I joined came to be known as the “Pay Plan of the Month Club”.   In endless gyrations, he ripped up complete compensation plans, all heavily commission-based, and replaced them with total makeovers.   I think we had eight completely different compensation plans that year.

At the beginning, you had to admire his willingness to change. Surely it was refreshing coming from a less adventurous environ.   His team of Store Managers were given these plans and expected to execute them.   And we did.   Unfortunately, he wasn’t terribly interested in our feedback along this trail.

Anyone that has spent time in sales understands what I will tell you, because when you earn money very specifically from certain activities, you will pay attention to those things.   The back-office systems were manual and very crude in this day, so our President, Armen, was trying get his teams to sell the higher profit items through varied mechanisms.   Indeed, moving away from a flat commission percentage across the board for product sales was needed.

But Armen had a heavy hand on the wheel, making wild swings overnight in comp plans.   And the sales force responded in kind, wildly changing their behavior and sending the whole company into a swerving, high-speed chase down an unknown road.   Sales people were changing what they were selling based on the plan.

Name brand monitors don’t earn as much profit as the off brands?   Quit paying any commission at all on them and double the commission on the off brand!   With no planning, we ran out of “commissioned” monitors in a week and had product stacking up to be delivered, waiting for monitors.   We ended up filling those orders with name brands eventually after almost losing the sale and upsetting customers, not to mention the sales help.   This went on and on, to the point that the latest change became high comedy.   It came close to putting the company into the ditch, but Armen saved that for a separate folly a year later.

So, no, I won’t recommend wild rides like that one.   But if there ever was a question of whether compensation changed people’s behavior, I think that was the definitive textbook case.   And my career in Sales interspersed with Marketing and Product Management, has provided me with a Doctorate’s worth of experience and study in behavior modification through compensation incentives.

The Secret to Sara

Now, let me say before proceeding, that Employee motivation comes from a lot of things.   A sense of belonging, a sense of value, a sense of fulfillment.   Many of us view our personal net worth probably a bit too much from our job.   How your boss treats you, how you feel about the company, the quality of the work environment, flexibility of scheduling, and more all have major influence on how you perform for your Employer.   Without question, those areas should be the first to be inspected for endowing a company with improved Employee effort.

But, freeze all of that, say you’ve done your best to create the atmosphere for positive Employee contribution, and I’ll tell you that a compensation plan tweak is likely to add more horsepower to that engine.   That most companies still pay most Employees on a flat salary or hourly basis is astonishing to me.   Again, anyone with a background that includes an alternative compensation arrangement, whether the experience was good or bad, can testify to their ability change behavior.

Let’s examine the issue for a moment though.   We’ll try taking something as close to the average American worker as we can, which probably means a medium pay job in likely an office environment.  

Plucking one out of anonymity, we now have Sara, who works for a mid-size insurance company managing the information flow surrounding the processing of claims.   Sara nearly never has direct Customer contact, and thus would not be a “focus” Employee for customer relations training if this company had it.   But Sara’s work quite directly impacts the Customer, depending on her efficiency.   Sara has just found a minor discrepancy that will require the Agent to confirm a detail with the Customer.   Why, the Agent may even know the answer.  

Sara has two choices.   Policy is pretty clear.   It must be sent back to the Agent and get corrected and resubmitted, a process that will add two to three days to the Customer’s final claim resolution.   Or, Sara can stop what she is doing, look up the Agent and call him, trying to track him and the correction down and maybe putting the claim to the side for the moment.   A bit of extra effort and a less tidy desk for Sara, to be sure, but at a minimal cost in overall efficiency and possibly a great impact to this particular Customer.  

What will Sara do?   Depends on how Sara feels, you might guess.   What would the bosses all the way up the line like her to do?   Probably would love to have her deliver superior customer satisfaction.  

Well, beyond Sara’s own personality, her current outlook on life, her relationship with her boss and co-workers, and maybe what kind of day she is having, . . . what can we do to positively influence her actions?   Yep, when all else fails, maybe we can motivate her by paying her for it.   Or paying her just a little bit more, perhaps accurately stated.

Next Page, The Difference? Aligned Employees

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