Here’s Why Weak Managers Avoid Pay for Performance Compensation Plans…
Let’s first establish that Pay for Performance compensation plans are the better way to go because the employer gets a better return on payroll with that plan.
(For a copy of our Whitepaper on Pay for Performance, send an email to firstname.lastname@example.org)
Opponents to Pay for Performance say things like…..
- The Sales Associates will fight for customers.
- The Customers will be annoyed.
- We will lose our team environment.
- This will no longer be a happy family.
- So and so pays for performance and their customers hate it.
- I won’t subject my customers to staff in fighting.
- We’ll lose good people.
On and on
This list can go on and on, but I’m sure you get the idea.
The thing is that there are two camps.
1) Those who are advocates for Pay for Performance and
2) Those who believe in keeping pay and performance, or lack of it, separate.
I don’t want to bore you with a sports analogy but, you have to admit, sports stars, who are top performers as the word ‘stars’ implies, get paid more – much more – than the average person on the team. This is a fact.
Why should this differ from the ‘team’ on the sales floor?
It shouldn’t. It’s the same thing. All members of the team are supposed to be working toward the same goal or target.
In a store, the target is a certain dollar amount of sales and on the playing field the target is to score enough points (goals) to beat the other team.
So, why would anyone think that it is the right thing to pay more to the sports star…who may score or set up most of the goals or points… but that it is not the right thing to pay more to the star or top performing Sales Associate who contributes the most in sales dollars toward the target?
We know the answer. It is because they understand that it would take powerful management…think ‘Coach’…to make it work.
That means, then, that weak management cannot do it successfully.
In fact, you cannot manage in a Pay for Performance environment if you are:
- managing from the backroom
- leading from behind
- afraid of your staff
- unable to apply proper management principles
- inexperienced in managing difficult situations
- unable to hold people accountable
- unable to coach and train
- unable to lead by example
- not a good example
And, the truth is, many companies hire managers who are all of the above and then wonder why they’re not doing the numbers.
For these people, the only way they can manage at all is to hire associates who are willing to work for minimum wage – or close to it – apply low expectations, treat them all the same and hope for the best.
The skilled manager…the strong manager is able to handle a group of much sought after and much appreciated ‘sharks’ on the sales floor even when some are bigger stars than others and, of course, that is going to be the case.
Give me a group like this any day!
A strong manager will ensure that customers won’t know that the staff are being paid for performance. That is one of the cardinal rules.
The customer should not feel it or find any evidence, whatsoever, that there is a commission or bonus involved with their purchase.
But, what does this take? It takes good, strong managers who consistently do the right things.
They watch, coach, support, direct, correct, discipline, set the example and become the loudest cheerleader.
The truth is, the really great performers know, intuitively, how to treat customers and how to get to the ‘yes’ buying decision.
They’re not pushy or rude or annoyed by delayed buying decisions or trying to prove something.
They are just professional. And, they certainly deserve to be paid in accordance with their performance.
Here’s a quote I know you’ve heard before…
“A group of sheep led by a lion will defeat a group of lions led by a sheep.” Author Unknown
But, what is even better, and what exists in the Pay for Performance world, is
…A group of lions led by a lion will give you an amazing ROI!
So, are you going to be a lion or a sheep?
All the Success!
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