I’ve come to appreciate feeling nauseous at work.
I’m talking about the kind of nausea that doesn’t come from being sick but that gut wrenching, internal conflict when you believe a course of action is the right one but it pushes new boundaries and makes you uncomfortable, unsettled and dreading the consequences.
I had that feeling when I decided to stop consulting and to work on growing the business. When I interviewed a candidate who was well outside our price range, only to realise that I had to redefine our business model because we couldn’t let him go. When your stars have performance issues and you need to have a confronting conversation.
It’s not comfortable but growth never is.
It hurt because I knew that commissions didn’t help sales. I’d seen Dan Pink’s TED talk on motivation.
It hurt because I knew that once you removed salary as a factor the people just got on and did the job.
It hurt because I’d seen it countless times.
The people who complained, “If you pay me I’ll do it”, never did.
I’d seen sales people who reaped the rewards of the good times but stopped selling to complain about their commission during the bad times.
It was way to risky to do though.
Every salesperson worth their salt wanted commission, you couldn’t possibly not do it.
Because, because, well … everybody did it.
Well not everyone, Fogcreek didn’t.
They’d seen the research and removed commission from their sales team.
And it hadn’t hurt them, their team collaborated more, the admin overhead was gone, the conflicting incentives were gone.
The move made sense for us as a company. Removing commission would mean that our sales team had no incentive to put the wrong people in the wrong roles. Our team had always looked after their clients but removing conflicting incentives encouraged them to be completely on their clients side, which I love. Without commission a failed engagement didn’t help their pay packet, but it damaged their relationship with the client and forced them to clean up the mess, which no one likes doing.
The end result was a closer and more trusting engagement with our clients. Our clients loved it too, the changes were subtle but they enjoyed having someone to talk to who wasn’t going to make a dollar if they took their people. I loved the response when I told them we didn’t pay commission anywhere in the company. The reaction was usually a combination of surprise, a little puzzlement and appreciation. It wasn’t expected, it was unusual, but they liked it.
During the time we made the change our consulting staff retention has improved, there are a lot of factors that go into this and the market is the biggest one, however we’ve noticed a general improvement in engagement and moral in our company, having a sales team that cares about the consultants, our clients and how we are delivering to our clients has a positive influence on that. Rewarding our sales team for putting consultants in roles they didn’t want to be in got in the way of staff retention.
When implementing the change I took the path of least resistance. This allowed me to dip my toe in the water and see how the change went. At first I did it with our Account Managers, the team that looks after existing clients. As our personnel changed, the new team members were all taken on without commission, both the internal and external hires. This was also the change had the greatest affect on our clients as they handled all the day to day interactions with them. It’s hard to measure but tensions in teamwork within our sales team appeared to go down. That may have been the change in personalities but removing an incentive that encouraged division certainly didn’t hurt.
We still had a few salespeople who were on commission. These were the ones that concentrated on finding new clients. One by one I sat them down and walked them through the changes. We proposed to increase their base and remove the commission. They’d end up with more in the bad times and less in the good times but would have no surprises. They’d know what they’d have in the bank every single week and could plan around it.
To my surprise they didn’t have a problem with it, there were some initial questions and a few discussions early on, however the predictability was reassuring and over the Christmas period where revenue and commissions are down, when our consultants are on holiday they’re not earning us money, it was particularly valued as there was no holiday season penalty.
Even our new hires didn’t balk at the system, but appreciated the consistency of income and the level of trust we’d placed in them to perform when hired.
The big concern about the change was how do you motivate the team without a financial incentive.
It’s strange but that is one problem that hasn’t changed.
Motivation of our team was a problem when we paid commission and it’s a problem now we don’t. I had expected expect commission to resolve the motivation problem, but really it doesn’t change it one iota and so you have to deal with in the same way as usual, through good management.
Paradoxically removing commissions has had a significant impact on my role. It has taken away my excuse that I didn’t have to get the team motivated because their commission should do it. Fittingly the responsibility is back on me to do my job properly, not to shirk the difficult conversations and take a more active and aware, but not necessarily overt, role in their performance.
Implementing the change went significantly smoother than I expect and it’s had a more widespread impact than I predicted, affecting our sales team, consultants and even our client engagement.
That sickly feeling of having to actually deliver something that was counter to established norms turned out to be unwarranted and removing commissions is one of the changes I’ve made to IMA that I’m most proud of.