I should have written this post years ago, when I experienced my first "adjustment" from a corporation regarding my sales commissions. I was working for a service provider in the health care industry and I was having a pretty good year since my territory had started at just 60% to plan. I was tracking at 101% to quota going into the final business day of the year, and I had 30 pending new orders totaling over $3,000 to be delivered on that day. In order for me to stay above quota, the company had to deliver only $121 of product to our customers. Just $121, when my average delivery day in the territory was $869. So how much product did my company ship, to my territory, on the last business day of the year? $40! Forty f#%cking dollars! I finished the year at 99.95% and received no year end bonus for finishing above quota. Coincidence or BS? I'm going to have to call BS!
If you don't know what BS stands, think of a bull defecating and you get the idea.
When I asked my manager how that could happen she replied, "I have no idea, maybe they shut down early to save costs for the fiscal year, but it happens all the time. It happened to me when I was in your shoes."
My response was, "Just because it happens all the time doesn't make it okay. It seems like the company was trying to screw me out of commissions and save some money. It's just not right."
"I know it' doesn't seem fair but we've all had to deal with it. You'd better get used to it. A lot of stuff happens around hear ya know. You're not the only one who got screwed. Angie finished at 99.98% to plan."
"Really? Thanks for the pep talk? Anything else you want to say to cheer me up? Do we have sweat shops in China making our products? Get used to it, is not what I was expecting to hear. "
"Well I'm sorry but that's how this company operates. Things don't always go your way. I know it's tough but you're gonna have to adjust like the rest of us."
Well I wasn't about to "adjust". I reached out to a recruiter that day, and quit the job within a month. How could they expect to keep good sales people if they were obviously trying to avert paying bonus or commissions?
And why do managers try to relate to you by saying, "Well tough luck kid. I know its wrong but everybody is dealing with the same thing."
What an absurd business philosophy! As a sales manager, I always supported my people when their bonus depended upon a slim statistical "error" which worked in the company's favor. My regional managers were usually pretty supportive but I always had numbers to back up paying the reps commissions. If it's not right, then as a manager you need to take steps to correct it, otherwise your people will quit.
So why do companies make "adjustments" to Sales Numbers? Simple, to improve profitability, and more specifically...earnings. CEO's, CFO's, COO's, in most cases have pay plans structured and linked to EBITDA.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It really is the standard on how a company's performance is judged. Not that I agree with it being a gold standard for performance, but that's a discussion for another post.
If it's near the end of the fiscal year or quarter, and senior executives are not in line to hit their goal on EBITDA, or just profits in general, then it's in the company's best interest to avoid paying large sales commissions. Sales commissions directly influence earnings because its a big expense especially if the reps are doing well. Naturally, it would make sense for an executive to look at reps who are on the cusp of making a bonus, and by ensuring that those particular reps don't get that bonus, the company earnings will improve. I'm not saying all companies put this theory into practice but I'm pretty sure that the one I worked for implemented it. It's not a smart business philosophy in my opinion because you end up losing good people. However some senior executives don't regard sales reps as people.
Some old friends informed me that the VP of Sales for my aforementioned company, overheard the CEO one drunk night at the bar say, "Sales reps are a necessary evil. If I could get along without them, I would".
Not exactly the kind of thing any person in Sales would like to hear from the CEO. Glad I left that company.
What do you think your CEO would say about your sales force? Or better yet, will he/she "adjust" their commissions. Let's hope not.
Have a good day and keep your eye on the prize...and your commissions!
No comments:
Post a Comment