You may be asking yourself, how does the afterlife fit into a blog on business and leadership. However, it could be one of the most important questions to ask yourself in a business situation because it provides a compass for your actions and decisions. When your standing at the pearly gates, you can rest assured that you won’t be asked how much money you made for your company in the first quarter of 2013. Even if you don’t believe in judgment after death, how do you want people to remember you? Do you think anyone will give a eulogy related to your business’s profit margins or do you think instead they’ll talk about your character and how you did or did not help others?
If you ever find yourself saying, “You need to think about the business” to justify a decision that you would otherwise consider unethical or not undertake in your personal life, you might want to stop and rethink your decision.
Incentivization programs work. They really work. The problem is they work all too well. The single biggest problem with incentivizing an employee is that they become loyal to the incentive, not to the organization. The actions of the employees then undermine exactly the results the incentivization scheme was created to boost. This is why you often see a proliferation of management policies, bureaucracy, and integrity trainings spring up after incentivization schemes are introduced. Because they need to be policed for the gaming that inevitably occurs.
Here are just a few of the numerous examples from my own experience:
– I once had two managers in a row that refused to turn on the air conditioning in the sweltering summer heat. They would tell their employees that it needed repair or a new system and that they were working to get that approved. Employees and customers would leave the building exhausted, covered in sweat, and feeling terrible. Why would a manager treat their employees and customers, the very people they depend on for the success of the business, so poorly? The two managers in questions did it to keep utility costs low and increase the likelihood of their budget staying within margins so they could get a bigger bonus at the end of the quarter.
– A notoriously poor-performing employee handed in their resignation. The manager then convinced them to stay and promised that she would help the employee get promoted. With the resignation withdrawn, the manager promptly transferred the employee to another center in order to keep her turnover ratio low to ensure a bonus that quarter. The poor-performing employee continued their poor performance at the new center and was let go soon after threatening physical violence towards other employees.
– A manager artificially raised her sales figures in the system to receive higher commission for her and her team without any real new revenue being generated. Because the numbers looked good, the manager received large amounts of praise from upper management. Other managers in the same position found out what was happening and then followed suit and the problem spread within the organization until some of the managers left and the new people coming in uncovered what had been happening. By that point, tens of thousands of dollars had been lost in undeserved bonuses, incorrect strategic decisions based on false numbers, and the loss of frustrated employees with higher levels of integrity.
Stories like these are rampant throughout the business world. We have all experienced the manager or sales person that over-promises, games the system, or only works for the bonus rather than work to support and develop their teams.
Incentives are great for short-term gains in the numbers, but at what cost? Are the numbers being delivered real? How much are they hurting you in terms of customer trust and employee satisfaction? The reality is that your incentivization scheme is actually encouraging unethical behavior and hurting your business in the long run.
If you have to incentivize employees to do their job then you’ve either hired the wrong person or don’t have a mission at your company worth following. First look at what your company is doing in the community and in the world. Are they creating value? Does your organization operate in such a way so as to act as a model for others? What positive contributions does it aspire to make?
If you have good answers to these questions, then you have an organization people want to be a part of. It’s an organization that delivers results because the people working there see the value in what they do and want to help the organization accomplish its mission. Once that mission is in place, all you need to do is hire the people who are passionate about it.
Fact: I once worked as a telemarketer. Related fact: I used to know a lot of shady people.
Telemarketing is the epitome of a sales job. With no pictures, no demonstrations, no relationship, you make your pitch. Like so many of these types of sales jobs, you work on pure commission.
Pure commission usually attracts a certain kind of person, a person interested in making the most money in the least amount of time. Short-term gain is the name of the game. It doesn’t matter how you make the buck, just that you make it. This is one reason why so many people hate telemarketers. Much like the stereotypical used-car salesman, they’ll say anything to get your money.
I had been working there for about a year when the company did something utterly surprising. Overnight, they scrapped commission and put everyone on a salary of 9 dollars an hour with opportunities for raises based on performance. Everything changed.
Over the next few months, the “scam and make a quick buck” employees started to disappear. In their place came a lot of high school and college kids who needed a job with a flexible schedule. Even better for the company, profits went up by 30% in 6 months across the board. This was despite the fact that only half as many pledge packets were being mailed (my firm raised donations for police organizations, so we needed the donor to mail the money in before we could take the fee for providing the infrastructure and call service).
What was happening? We were mailing out far fewer pledges and were paying sales reps regardless of whether or not they closed. How did profits increase? Well, before, sales reps would lie, guilt, or badger people into making a pledge. Once the pledge went out, they got commission on it regardless of whether or not it was returned. However, once the commission was gone, the people interested in doing anything to make a quick buck disappeared. In addition, there was no motivation to close as many pledges as possible.
Instead, the people taking their place were sincerely interested in raising donations for a good cause. They actually connected with the people they called and made people feel good about donating. This resulted in less pledges being sent to people who didn’t really want to mail them back and more people happy about the pledge they were making.
Bottom line: if you want a team that truly cares about your customers and is more focused on doing the job right rather than just getting it done, put them on a salary. Forget the commission, incentives, and bonuses. Instead, find the people that care about your mission and show them how they are making a difference. Your customers will see the difference immediately.
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Years ago, I worked for a telemarketing company that specialized in raising donations for police organizations. Most of us would raise about 1000 dollar’s worth of pledges on a normal day. But there was this one guy that would pull in 3000 or more every single day. Management loved him because he made the numbers look great. Here’s the thing though – the guy was a hard-core alcoholic. He would usually come in drunk and continue to drink throughout his shift. Many nights he would have to be sent home early because he was no longer intelligible on the phone. Even worse, the return rate for pledges that were sent out to people he talked to was less than 10% (normal return rates were between 30-50%). The reason was that he usually guilted people into pledging and, once they got off the phone with him, they felt so bad about the call that they decided not to send the pledge in after all. Yet, management kept him around because the numbers looked good on paper at the end of the day. You can guess what message this sent to the team.
Well hopefully not as bad as the example above, letting the star performers get away with cutting corners is a common occurrence in today’s work place. This kind of blatant favoritism and lack of accountability absolutely kills morale and sends a number of terrible messages, not least of which is that, “as long as you bring in the numbers, it doesn’t matter what you do.” This generally creates a culture where every employee is out for themselves, gaming is rampant, and the only loyalty an employee shows is to their next paycheck.
High performing teams require high accountability from everyone. The feelings of unfairness that arise when different employees are held to different standards kills far more productivity than the extra (often dubious) results driven by one star performer. Great leaders know that it’s not what results you get, but how you get those results. The how is what builds customer & employee loyalty and delivers consistent, long-term results for a sustainable business. That’s on top of the fact that it’s simply the right thing to do. Teams respect leaders who hold everyone to the same standard and don’t see the numbers as more valuable than the team.
Today I met with a customer who promised that he would sign up for our program if we were willing to bend some rules and provide some extra services to better fit his needs. I said no. Why? Because our program speaks for itself. I am so confident in what we offer that if a customer is choosing not to buy because of some non-essential details or because they want special privileges, then they aren’t the right customer for us.
Whatever product or service you offer needs to be what blows the customer away. If you need to gain customers by offering extras or giving in to demands for special privileges, then your focus needs to be on creating a better product or service or maybe showcasing it better.
The pressure is always there for more sales, for more profit, for more growth. However, it’s not about making the sale, it’s about making the right sales. If I sold to a customer who was only interested in what special privileges they could get rather than our program, then they weren’t interested to begin with. They would most likely be an unhappy customer, one constantly demanding more or extra, because they had never been interested in what we had to offer in the first place.
It’s also not worth compromising the integrity of yourself and your organization for just one sale. You can always make promises you can’t deliver on, but this will only destroy your reputation in the eyes of the customer when you don’t deliver. You can also make promises you shouldn’t deliver, but can probably get away with. This sets a terrible standard where customers learn that everyone is receiving something different for the same price. It also tells the customer that you don’t have confidence in your product. If you’re willing to give extras and break policies to close a sale, then you don’t really believe in what you’re providing. It’s time to either provide something better or find a position with a different organization whose product and service you do believe in.
Making the right sale means making the sale that keeps your integrity and that of your organization’s intact. It means seeking out customers who truly value and desire what you have to offer that will remain loyal, provide repeat business, and spread positive word of mouth about your organization to others. It means sometimes letting go of a short-term sale to ensure the long-term health of your business. At the end of the day, your employees will be proud of what they are offering and your customers will respect you for what you provide and the integrity with which you provide it. The next time you are under lots of pressure from a customer or from your boss, think to yourself not just do we need this sale, but, is this the right sale for us.
Did you know that companies that promote volunteering have more engaged employees and are more likely to retain them? Did you know that creating a positive brand image through corporate citizenship initiatives attracts more customers and drives profits? Who the hell cares!
You shouldn’t be involved in your community because it drives your bottom-line. You should be involved in your community because your business is a part of it and it’s the right thing to do. You should be involved in your community because your business depends on that same community, whether it’s local or global, to survive. As your business grows, it also grows in wealth and influence, both of which can be used to make positive contributions to the very same employees and customers that got you where you are today. So today, show them some gratitude and become a part of business for a better world. Start a volunteer project, make a donation, raise awareness of an important social issue, or make the change to more eco-friendly materials. Tomorrow starts with you.