Moving Sales Compensation away from Transactional Thinking


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We are seeing a shift in organizational structure that is unprecedented in modern times.  This shift seems to dominate most social media forums, discussion groups and conferences. It has permeated even the largest of organizations. Being agile and innovated is not enough. We have to be transformational and disruptive to meet today’s demands. Our organizations have to change structurally to accommodate this new wave of thinking. In the book, Building the Learning Organization, author Michael Marquardt gives as good and clear explanation as anyone by utilizing the following table for the shift that is required.

Org Transformation

To digress a moment, this is why, Lean has become the dominant process methodology supplanting Six Sigma during the 21st century. You can easily envision Six Sigma in the old style organization and the obvious problems it has surviving in the new style. Lean, on the other hand, thrives in the new style of organizational structure (See my blog post, A New Approach to Lean with Robert Fritz).

My discussion though is not about process methodologies; it is about sales structure. Few of us will disagree that this new age of organizational structure is upon us. Few of us will disagree that our customers are moving in that direction. We are partnering and building alliances, and what use to be adverse selling and purchasing tactics has transformed into the new culture of open innovation and co-creation platforms. Only, we forgot to tell our sales people, and few have walked the path of restructuring sales compensation. We continue to build incentive based compensation for the old organizational structures. We think in terms of funnels and decision makers trying to reach into functional structures and hierarchy.

The work of a single individual is seldom the determining factor in our customer relationships and often we are engaged in multiple supply channel offerings that compete directly with each other. This structure does little in the way of long-term development of our customer base. If we are competing internally with ourselves, we seldom will have the customers’ best interest at heart.

Would it be more productive if our sales incentives and structure were built around developing around the new organizational structure? Should we be looking at behavioral changes of the people, groups and organizations with whom we are working? Should we build a structure that allows for different people, groups and organizations to come and go at will without damaging are previous efforts?

Should we shift evaluating sales people on outcomes that they have less and less control of? Should our compensation move away from transactional value or goods dominant logic style of thinking where better, faster, cheaper defines the outcome? Rather, should compensation move towards a Service Dominant Logic (SD-Logic) style of thinking where value is defined as functional, social and emotional? The question arises can we define, monitor and evaluate our programs and people on these factors?

I believe the principles of SD-Logic and for example, monitoring the value of use can ultimately be the prescription for restructuring the sales process.  I am going to engage in a series of blogs that will discuss this theory in greater detail.

Lean Engagement Team (More Info): The ability to share and create knowledge with your customer is the strongest marketing tool possible.

Republished with author's permission from original post.

Joseph Dager
Business901 is a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He has authored the books the Lean Marketing House, Marketing with A3 and Marketing with PDCA. The Business901 Blog and Podcast includes many leading edge thinkers and has been featured numerous times for its contributions to the Bloomberg's Business Week Exchange.


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