and are a hallmark of lazy management, generally speaking
That's my thought. I really like the idea of commissions to reward hard work, but either way you have to manage things right.
At one small company I worked at, the main sales guy received very little (if any) commissions. He didn't get many sales at all, but that wasn't a big issue since he had his salary.
At another, there were three sales people on commissions. One of them didn't sell much or provide much value, but he had in the past. As long as his old clients didn't leave, he kept getting paid (due to the way things were structured). This did not endear him to the other employees.
The other two sales people were very motivated by the commissions. They could sell a ton, which would be great if it wasn't for the way it was done. They were in constant cut-throat competition, trying to adjust things so their numbers would be 1% better at the other one's expense. This just devolved into a ton of fighting, eventually causing controls to be put into place to prevent either one from tweaking things. It was also easier to get a new customer to pay us for a few months than increase old business or keep them happy, so customer turnover was very high.
The best system I saw had one person working to get new business (on commissions), and once the sales was in it was managed by someone else (on commissions for keeping/improving their business). This removed the incentive to replace good old customers with fly-by-night new ones, but it was a very small team so I'm not sure it would have scaled very big.
Whether there are commissions or not, management needs to keep an eye on things to intervene when something is happening that's not in the organization's best interest. There are plenty of sales people (just like every other profession) that are happy to take advantage of companies if given the chance. Some people can do an amazing job for you, but need a ton of oversight.
That's my thought. I really like the idea of commissions to reward hard work, but either way you have to manage things right.
At one small company I worked at, the main sales guy received very little (if any) commissions. He didn't get many sales at all, but that wasn't a big issue since he had his salary.
At another, there were three sales people on commissions. One of them didn't sell much or provide much value, but he had in the past. As long as his old clients didn't leave, he kept getting paid (due to the way things were structured). This did not endear him to the other employees.
The other two sales people were very motivated by the commissions. They could sell a ton, which would be great if it wasn't for the way it was done. They were in constant cut-throat competition, trying to adjust things so their numbers would be 1% better at the other one's expense. This just devolved into a ton of fighting, eventually causing controls to be put into place to prevent either one from tweaking things. It was also easier to get a new customer to pay us for a few months than increase old business or keep them happy, so customer turnover was very high.
The best system I saw had one person working to get new business (on commissions), and once the sales was in it was managed by someone else (on commissions for keeping/improving their business). This removed the incentive to replace good old customers with fly-by-night new ones, but it was a very small team so I'm not sure it would have scaled very big.
Whether there are commissions or not, management needs to keep an eye on things to intervene when something is happening that's not in the organization's best interest. There are plenty of sales people (just like every other profession) that are happy to take advantage of companies if given the chance. Some people can do an amazing job for you, but need a ton of oversight.