Management Musings 2.2

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There continues to be more research suggesting that incentives don’t work. This should lead us to reexamine our commission programs shouldn’t it?

Barney Frank, that once famous or infamous (your call) congressman, spoke at the Annual Awards dinner of the trade newspaper “American Banker” in 2004. He began his talk with a question “At the level of pay that those of you who run banks get, why the hell do you need a bonus to do the right thing?” Of course there was no answer given there was silence, so he continued. “Do we really have to bribe you to do you jobs?”

The same holds true for incentive programs on all manner of jobs. Are we truly trying to modify behavior with these programs or just pay more money?

I think it is time to ask some questions for instance:-

  • Why do we pay the same commission to equipment sales people who replace one of your brans as the commission for replacing a competitive brand?
  • Why do we pay a higher commission on the lowest margin products, undercarriage, as we do on the highest margin products, maintenance programs?

Just wondering why but then again that is what I do. Check out the studies and you will find that salaries are a better payment plan than commission programs.

The time is now.