Career Q·MAG

The Curse of the Sales Manager: You Get What You Pay For

The Curse of the Sales Manager 3/3:
This little series is based upon a real experience I had in my professional career as HR Director in a multinational company. It’s ok to be astonished at first, but then please go and make sure it won’t happen likewise in your own company.
1. The Lost Sales Manager
2. The Missing Sales Team
3. You Get What You Pay For

I once interviewed a sales manager in client company. Talking about the allocation of his working capacity, he proudly told me that more than 90% of his time he’s selling, and he would generate most of the sales revenue for the company. For him this was a great success: because, in his words, the revenue would drop dramatically if he wouldn’t be selling anymore.

When I asked him, what reason there could be for the low sales performance of his subordinates, in a way he takes it for granted that nobody can outsell him. Because he has always been the top in sales – actually, that’s the reason why he became the sales manager. 

When I asked him if he would rather be a sales agent or a manager, the answer was very simple: “If I would only be a sales agent, I wouldn’t have the manager title anymore”.

I felt really bad for him when dropping the hammer and telling him that he simply wasn’t doing the manager’s job – but to be honest, I could not even blame him: his compensation package was composed of a base salary and a commission for the sales he generated first hand. 

So if he would really do his job, not only the company’s revenue would dramatically drop. But while the company sales would eventually go up again – and even higher then they had ever been in the past –, his personal salary would continue to stay down. Because there would simply be no sales commission he could earn. 

The salary is the most direct expression of the real vision, values and organisation charts of a company towards its employees. And it directly influences what will be done – and what not: any inconsistency in the pay structure design – be it by honest mistake or for reasons of deliberate propaganda – will have an effect on the real-world performance of the staff.

This sales manager, for example, will always focus on his sales. Even if his boss would tell him to prioritize the recruiting efforts and hire a few more sales agents, guide them and develop them into top performers, it would be quite improbable that he would really fully commit to that. Simply because there’s nothing to gain from it for him – actually he would even lose out on his sales commission and lower his personal income.

A company’s pay philosophy is essential for its success: I worked once for a company with a generous global profit sharing scheme, a McKinsey developed and implemented performance management system and a lean and agile workforce thanks to a layoff of more than 30% of the staff in the Chinese branch office, that never (actually, until today – and I left quite some years back) found a way to become profitable. Because in the end the individual worker, employee or manager did not really understand how her/his salary is connected with the local branch office’s success – and how to influence it, and through it her/his own salary. Actually, there was no correlation. Or in other words, the bonus was paid as long as the company was profitable globally – if the branch office brought in their share or not.

You on the other hand don’t have to copy all the mistakes made in the business world. When your moment comes to decide weather to barely survive or crazily grow, then of course the answer should be to grow. But this will also be the moment to get some ideas straight, and to follow through with the conclusions.

  • What skills, attitudes, knowledge, … do you think are really valuable for your company? 
  • What kind of behavior and results do you strive for? 
  • And how can you measure and pay for these behaviors and results? 
  • Who will get promoted in your company, and for which reasons?
  • And how will you make sure, that they live up to the expectations? 

Your associates will need to really understand your vision of the business to fully commit to contribute to your vision, strategies and business results. To make that happen, it’s essential that business needs, company values and pay philosophy all are perfectly aligned – otherwise competing messages will create confusion and conflicts. 

In our example, the sales manager’s pay structure and incentive scheme would have to be completely redesigned: because at the moment he’s paid for sales activities, but responsible for sales management. In the end, you will always get what you pay for: and that means, that nobody’s doing his work as manager today. So either the position is unnecessary – then cancel it. Or it’s necessary – then important work is not getting done – like in my example, with harmful results to business development. All this sounds quite obvious now – but believe me, I chose this example because I’ve seen way too many similar cases in real life. 

In the end of this little series, I would like to share a three tiny bits of advice with you to crack these “curses:” 

  • make sure people understand their part/role in your whole business vision and why they are important: feeling part of something bigger increases motivation and engagement, and exactly knowing one’s responsibilities leads to a more focused work. It’s a bit like in an orchestra: everyone needs to be able to play her/his part well, but it needs the conductor to bring these parts together harmoniously and thus to give a great performance.
  • make your vision of the business actionable and define the standards for outcome, behavior and performance together with your employees: as specific as possible in the beginning, and step by step with more and more freedom in the execution. Only if everyone knows exactly what she/he is supposed to do and how success is going to be measured, they can contribute effectively to the organisation’s success. 
  • make sure that job descriptions, responsibilities and paycheck are perfectly aligned: in the end, employees will always focus on what they get paid for – so make the money you invest in them through salary, bonuses and incentives count. A sales rep should be rewarded for successful sales, an accountant for perfect bookkeeping, and a manager for inspiring leadership, sustainable people development and efficient organisation, to just give a few examples.

Simply follow this advice, and you will slowly transform your organisation into a more joyful, energetic and profitable place to work. Just make it happen, step by step. 

If you prefer to be professionally supported by experts who have already successfully guided companies through this transformation, of course could just give us a call.

Hong Liu

By Hong Liu

Hong is an experienced HR expert for challenging business situations: if you want to create an environment attractive to top-level talent in leadership or build up an efficient HR administration, she’s the perfect choice. For more than 10 years she’s created stunning results in multinational corporations, like successfully integrating two company cultures post-merger, or building up a new plant’s staff from 0 to 450 in two years, or creating an Asia-wide management development program for more than 120 junior talents.