Why Tinkering with Your Comp Plan Doesn’t Get You Better Results
I frequently hear about the disappointment executives feel about the results from their sales team.
It’s almost Pavlovian that one of the first areas that gets adjusted as a means to drive change is the compensation plan. It’s common because of an often-faulty assumption that simply motivating sales people with money will improve their performance. I worked at a company where the CEO was constantly redesigning the comp plan. It rarely had a lasting impact. Here is why:
Money can increase effort and redirect focus, but it won’t make people better at their work.
What if someone offered me a million dollars, and all I had to do in return was dunk a basketball six months from now? I would be excited and even motivated to practice every day and give a lot of effort. But it’s very unlikely that in six months I could do the dunk. At that point, it may even feel demoralizing because regardless of the incentive, I still don’t have the skill required to get the job done.
And this is the linchpin for why comp plan adjustments are good for driving additional focus and effort, but don’t often produce significant change. Because compensation can’t:
- Ensure that people on your team are in the right roles.
- Direct or lead people to do the right things.
- Develop and enhance your team’s skills.
- Evaluate your team with the right metrics.
Only the hard work of leadership – establishing high standards and working diligently toward their achievement can create the results you want. Don’t look to the comp plan as a silver bullet to motivate and drive success. Of course it is an influencing factor, but only that. Find a solution that works on building a high-performance team and putting people in the right positions. This will give you the results you are looking for.