Your Incentives Plan May Be Bringing Down Your Revenue: An Interview with Lindsay McGregor

20 October 2016


It’s a reality we’re all facing as more and more millennials enter the workforce: commissions and bonuses are no longer a sales reps’ biggest motivator.  In some situations, your incentive plan may actually be hurting your company’s revenue.  Lindsay McGregor and Neel Doshi have conducted extensive research, questioning thousands of employers and employees, for their New York Times bestselling book, Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation.  Here, Lindsay tells us how to change the way we motivate our sales reps.

You talk a lot about Total Motivation in your book.  What is Total Motivation (ToMo)

Total Motivation is how humans are fundamentally wired.  It’s what motivates us to achieve our highest level of performance.  To summarize it very briefly: why you work determines how well you work.  The why determines how well.  If you’re coming to work each day for a set of positive reasons such as you love the work itself or you deeply believe in its impact, you’re going to have much higher levels of performance than if you come into work every day simply to pick up a paycheck or because of guilt or shame or all these other things that organizations build into their cultures to motivate people.

You found in your research that sales commissions decrease Total Motivation.  Why

It’s fascinating – it’s actually very nuanced.  You would think that sales commission would act the same way all of the time.  But it doesn’t.  When somebody does not believe in their product, sales commission actually reduces performance because you’re selling the product simply for the paycheck or the bonus or the commission, not because you actually believe in the product itself.  But when you believe in the product itself, sales commission can actually increase motivation performance.  However there are many, many situations in which sales commission can actually shift your reasons for working and it can result in all these predictable negative consequences – like employees’ creativity going down, their helpful behavior going down, even what’s called cobra effect, which is unintended consequences, such as what you’re seeing right now in Wells Fargo.

What kind of turn around have you seen in sales revenue in companies when they work to increase Total Motivation?

This is one of the most underused levers in management.  When a group of professors gave leadership training to bank branch sales reps, just for a few days, in how to increase Total Motivation, their sales of credit cards went up 20% and their sales of mortgages went up 40%.  And in the work that we do with organizations, we typically see differences of 20 to 30% in individuals with high ToMo and low ToMo.  So this is a really powerful force for changing sales.  This is something that very few people actually know about.  We’re taught to believe that sticks and carrots are the way to get the highest level of performance, but it’s actually ToMo.

What can sales managers start doing today to help increase ToMo in their reps

The easiest thing to start with is to start with the most powerful motivator in ToMo, which is play.  And this is when you’re working simply because you love the work itself.  You find curiosity in it.  You treat it like an experiment.  You love learning.  And so we’ll sit with sales people and help them think through how to think of their job as an experiment.  A very simple example is when a new customer comes in the door – experiment with different ways of greeting them.  Have a goal of testing five new ways of greeting somebody and see what happens.  And having that intense focus on learning will 1) bring far more play into the workplace and 2) it will actually start to help you and your employees increase their skill in the organization.

Bottom line

We’re at a critical moment in time when many organizations have realized that incentive compensation has lots of negative side effects – just look at Wells Fargo for example.  But very few people know what to replace it with.  And if you just take away sales incentives without doing anything else, you’re very unlikely to see success.  So it’s a critical time to start learning how to do things differently.

About the Author

Lindsay McGregor and her husband, Neel Doshi are the co-authors of the New York Times bestselling book, Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation. They also co-founded Vega Factor, a startup that helps organizations transform their cultures. Lindsay is a keynote speaker at the Sales Force Productivity Conference October 24-26 at the Ritz-Carlton Buckhead in Atlanta.  Click here for more information.

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