When a top sales person is making more money than anyone else in the company, is the only answer to fire them?
Many years ago, I brought an $8 million dollar deal with one of the then Big 3 automakers to my boss. I’d been working on the deal for the better part of a year, our company was in the final two to win the business, and we were being asked to shave off some of our costs to be awarded the business.
To the shock of everyone in the company, including (especially) me, my boss made the decision to walk away from the business.
Later I found out the issue wasn’t that we were being asked to bring down our price and sacrifice some of our profit. It was that my comp plan, which was uncapped, called for me to be paid 20% commission. My boss didn’t want to set that precedent, so she decided to just forgo the business opportunity entirely.
The sad truth is, had my boss simply put her cards on the table with me and shared the needs of the business and the concern about setting a compensation precedent with a sales person, I would have happily agreed to some other terms that would have allowed everyone to win.
Instead, we never broke into the automotive market, we gave up an $8 million deal, and I left sales.
Companies are constantly in search of the right balance of compensation against the profit needs of the business. You don’t have to sacrifice your business profit to keep your sales superstars. You just have to be willing to have the honest business conversation with the sales person. And if they really are a superstar, they will work with you to make it an all-around win.
In our work, we hear a lot about the tough issues companies are grappling with, particularly as they move from one stage of business growth to the next. These growing pains are common, and often, clients intuitively know the best course of action, but for any number of reasons, they don’t want to take that action (or they may be looking for outside validation that they don’t need to!).
In the next few posts, I’ll be tackling some of these tough business choices, and I hope you’ll also weigh in with your thoughts and experiences in the comments.
And if there’s a specific question or issue you’d like us to take on, let us know and we’ll address it in a future blog post.