I developed this as a discussion paper for a client’s European Sales Management Effectiveness Project. The interesting perspective is how the issues raised in the early 90’s are still validated by Deliotte’s 2010 survey of 250 Sales VPs. It begs the question:
Why are Sales Compensation Hydraulics Still Leaking?
1.1. How do you design a good sales compensation plan?
Specifically, a good plan:
- Uses performance metrics that drive the company’s overall strategy;
- Ensures roles, skills, selling, processes, internal culture, etc. are consistent with the overall sales force strategy
- Are mechanically sound ; and
- Can be administered efficiently.
- Fits for your sales organization?
- Can be administered with existing people, processes, data, and technology
(The following is based on Frank Cespedes book Concurrent Marketing, The Management of Major Sales (Neil Rackham) and 2010 Strategic Sales Compensation Survey by Deloitte & Varicent)
1.2. Compensation Hydraulics springs a leak
Since the mid 90’s the great bulk of literature still emphasizes what might be called
“Compensation Hydraulics”: Push this pay lever and get this kind of behavior.
This type of thinking fails to recognize that sales compensation is dependent upon, data analysis, strategy, values and human motivation. Many forget to ask:
How should we pay our customer facing people? (Which inevitably involves a range of business issues?)
A key finding of our research in a large mortgage loan client (Nick Anderson and Linda Marsh) was that 40-50% of mortgage loan customers surveyed had concerns about their house buying process. Unfortunately, Mortgage Loan Officers recognized only half of these people had such concerns. Also, Mortgage Loan Officers thought that half the people who didn’t have concerns did.
So, one key factor on offering help and advice is correctly identifying people
who have concerns they need help with.
How can we identify when people have concerns?
(Journal article by George M. De Marco, Byan A. Mccullick; JOPERD–The Journal of Physical Education, Recreation & Dance, Vol. 68, 1997)
I like this article as it challenges some of the more superficial approaches to training sales managers to coach. It is a challenge that so many duck and as I wrote in Quality Sales Managers Matters:
#1 High-performing sales manager’s impact reps engagement and financial performance. Reps reporting to great managers report high job satisfaction with four times more revenue than those working for poor managers.
#2 Coaching Is King—The manager activity most linked with sales rep success is coaching. However, their coaching ability to coach individual sales reps is the weakest.
#3 Who they coach is selective— Coaching low or star performers does not statistically improve performance. Core performers, the 60% center of the performance Bell Curve make significant improvements with coaching.
#4 Effective coaching hits the bottom line. Core sales reps receiving great coaching reach on average 102% of goal in contrast to sales people reporting poor coaching who achieve only 83% of goal. Good coaching can improve core performance by 19%. This is lower than with PDS’s and Huthwaite’s sales productivity projects (18%-30% sales increases)
#5 Great Coaching Is a Learned Skill—Quantitative analysis shows that five elements account for 77% of coaching effectiveness. Armed with this information, we can develop great coaches by focusing them on specific activities such as emphasizing the importance of targeting the best opportunities and spending at least three, but no more than five, hours coaching each rep per month.
The characteristics of coaching expertise, research into coaching effectiveness, coaching expertise, and expert performance in other domains, a profile of expert coaching has emerged. – Five distinct Characteristics
Characteristics of Expert Coaches
1. Extensive, Specialized Knowledge
All around understanding of the internal and external sales environments
2. Organize Knowledge Hierarchically
The ability to store and organize information as learning patterns which allows them to compare idealized performance standards with the present performance of their people.
At its core the experts are superior planners and evaluators. E.g. expert gymnastic coaches used a model to determine and plan for their athletes potential developing short- and long-term goals being set and periodically reset according to the athlete’s progress.
Another study compared 10 expert and 10 novice basketball coaches. The results indicated:
“..experts had more in-depth and detailed planning protocols, with more augmentation, sub goals and anticipated problem statements than novices. They planned practice sessions in bigger chunks, taking into consideration more components of the problem at one time” (p.215).
3. Highly Perceptive & Superior Problem Solvers
Experts are uniquely capable of accurately perceiving stimuli in game situations. They can sort important clues from other “white noise” and then generate superior responses. They can see how all the pieces fit together to help their athletes to plan, diagnose and strategize more effectively. The experts solve problems more methodically
4 Accurately assess and prescribe performance
This positively impacts the quality and quality of coaching during practice. Basketball experts spent 42% of their time in instruction In another study, expert coaches gave significantly more feedback.
Expert coaches are able to detect what people need to know and then find ways of supplying that information.
5. Exhibit Automaticity During Analysis & Instruction
Several studies on coaching effectiveness showed that coaches of less satisfied high school teams often interrupted the flow of practices to instruct, whereas coaches of satisfied teams typically provided instruction as they played.
Commentary of Summitt’s coaching:
“provides succinct and rapid-fire instructive and prescriptive feedback during play”
6 Self-Monitoring Skills
Experts are more self-aware, analytical, evaluative and corrective of their performances. They are driven by the desire to improve their own coaching performance
Developing Expertise in Coaching
- Gain More Knowledge
- Study successful coaches
- Identify the important. Organizational skills are critical to effective coaching. Keep yearly, monthly, personal records
- Stay perceptive, recognize problems early and solve them quickly.
- Concentration is a must – focus on the task at hand and don’t let yourself be interrupted or distracted. When analyzing a skill performance, focus only on one aspect of the performance, not the whole skill.
”The sooner the coach can analyze skill problems, the sooner the will move to the expert level”
- Identify & solve problems in a rapid, complete and correct manner demands skill that continually needs to be developed
- Increase short- and long- term Memory – A great distinction between the experts and others
“the ability to acquire, retain and apply knowledge”
- Make it Automatic – develop practice routines, warm-up drills, pre-game activities
- Regularly monitor and evaluate your own coaching