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Pay Now, Pay Later - by Michael Finn It is not always what you pay; more often it's how you pay. We have all heard the stories of how useless a 20% commission would be if you could not sell the product. Or worse yet you could not get paid the commission due. We are involved in selling a product with 50% sales and marketing cost, without much hard cost. If you take a small percentage of the 30% acquisition cost, my guess would be that over 55% of our costs go to labor. That means us as well as the people working around us. It may be cliché for some industries, but not in ours: "People are our greatest asset." Invest in people and business will get better each day. It may be repetitive, however it is essential in business today. The trick is not in creating the perfect organizational chart. The trick is to make proper calls on hires, money, motivation, and the timing of the preceding. Let's take a look at hiring. When you can, take as much time as possible. Sometimes speed is of the essence and that is understandable; still, check everything possible and then find some more. Every position is essential, no position is insignificant. One bad hire could cost you time, teamwork and profits. Let's say you need a front desk person and the first applicant walks in and seems "good enough". (By the way never accept anything that is "good enough". Always exceed expectations, even your own.) Now he or she turns out to have an attitude problem, shows up late-- well you get the picture. This poor performance and attitude permeates to two other associates, now we have a Breck Shampoo commercial that can be a cancer to your organization. Then we have to fix it. "It" costs money, time and synergy. Now let us look at how we pay or get paid. I remember once being offered a huge percentage to run three resorts in the Caribbean. It would have come with a Lexus, condo on the beach and all the money I would need. To get this position I would have to give up my good paying job that I had had for six years. I almost did it; greed will cloud your judgment. Well I researched a bit and found my financiers were not of the best ilk. To be more accurate, one is in jail now and the other is out of the business. This lesson has been learned by many people in most industries. How many times did Mom or Dad teach us about the "grass that's always greener"? Just so you know the trick is not in the color of the grass, but the angle from which we are viewing it. OK enough philosophy. I have had my share of salespeople who have left for greener pastures, normally a point or two on a commission. I have a great number of them who have come back when the green was not forthcoming. The trick is that you do not have to overpay, just pay and pay well. What I mean by "well" is on time, according to guidelines and what was previously promised. Look at Fortune 500 companies: they do not jerk around an associate for a $75 difference on a commission. This plays into our next subject: motivation. How motivating is it to squabble about $75 without cause? This has happened far too often in our business. That sales exec now tells two friends and we have another Breck Commercial. I am not saying that every time a commission is questioned that the salesperson is right. Although some I know may think that they are always right, you must be fair and always remember "the tie goes to the runner". In other words if it is too close to call, give it in favor of the associate. The positive motivation will pay dividends. Keep your people upbeat by giving them plausible pay structures and incentives. It's not much good to have an incentive on a performance that cannot be reached. You can make good hires, pay well and have great motivational programs in place and still not have an effective organization. Timing is the glue that keeps it all together. Even if it is within reason, cutting salaries or jobs just before the holidays is never a good idea. Even coaching can be demotivating if not timed properly. Rick Pitino cited in his latest book that the best time to criticize your team's performance is when they are performing well. Sounds counter to most of our experiences. We normally get chewed out when we are not performing well. Pitino's theory is that your associate or player has a higher self esteem when things are going well. This gives them the ability to handle criticism. If they are performing poorly they know it and do not need your help to point it out. |
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More Finn | Home Michael S. Finn, RRP,
writes an insightful bi-weekly column regarding issues of ethical and profitable sales & marketing. Read his bio here |
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