It’s probably very hard to find a person on this planet who would reject a (financial) bonus. Getting the recognition for one’s hard work in a monetary form is very welcoming for most of us. However, it could also bring out the worst in us. The financial crisis of 2008 taught us a lot about the destroying effects of toxic financial incentives, especially if they’re based on achieving short term goals. Whilst there has been a debate of whether financial stimulants are beneficial for business in the long term, there is a lot of scientific research which states the opposite; it definitely inspires people to go the extra mile, but it could also evoke a toxic culture and an unhealthy appetite for taking risks. Contrary to this there is a lot of empiric proof that a great culture and a clear purpose works even better, especially long term.
Incentive driven organisation: lots of KPI’s but a huge trade off
Creating an incentive-based (sales) organisation is relatively easy; just check Amazon and order one of the many books offered on this topic. Another way to do this is to assign a consultant and they would definitely come up with some clear guidelines and outlines. Furthermore: managing an incentive-driven company is also something you can learn relatively ‘easy’. I’m obviously ridiculing my friends at the sales department, but I’m doing so because I want to make a clear point here. While some people are looking down at these departments where KPI’s are being micromanaged until the end of the fiscal year, the competitive culture is also welcoming. Unfortunately, there’s a huge trade off; people will mainly focus on their KPI’s and will view the company’s performance with a bias lens. Even worse, it could create a toxic culture in which every individual is fighting to achieve their individual goals.
The toxic culture of Wells Fargo: cross sell as many products as possible
Like many of us, I really thought banks and other financial institutions would have improved on their operations. While some of them undeniably have changed their perspective, others haven’t. One of the most recent examples where financial incentives almost brought down an entire company is the Wells Fargo account fraud scandal. Not afraid of being stigmatised using toxic financial incentives, the US-based bank pushed their sales staff to extended lengths to generate more bank accounts. Introduced by the company’s leaders, ground level staff – referred to as ‘sales staff’ and not ‘branch employees’ – were ordered to cross sell as many products as possible. If they did not meet the ambitious sales targets, they were intimidated by the leaders. The toxic sales culture led to a point where local people were actually encouraged to sell credit cards or extra accounts without the customers’ consent. Selling these products was made easy partly because of a process known as ‘pinning’; By setting the clients pin on 0000 they had full control of clients accounts.
Nothing wrong with being overly ambitions, but don’t push it too hard
Being ambitious in selling a product is ok, but only if your sales staff don’t cross any moral or ethical lines. If you’re into car sales, it doesn’t make sense to sell a forty lac car (€35.000) to a nine year old boy. While this example would be clear for almost everyone, things soon tend to get very blurry: what about selling someone a holiday insurance with a strong health component while the actual health insurance of this person already covers medical costs during holidays? Furthermore: if you’re fully confident that the target audience could benefit from buying the product or service, there is a risk involved when the company pushes too hard to achieve their sales targets. The very friendly sales staff can turn into sharks, doing everything in their power to sell the product. Selling the product to people who will not benefit is the least negative thing that could happen. Even worse, is that the sales staff would not notice any possible changing behaviour and thereforel not push back, creating the earlier described toxic culture. Luckily there is a much better way to fire up your people; creating the best culture possible.
Culture: the social order of an organisation
Before describing this, I want to emphasise about the importance of understanding the company’s culture. I’ve recently read a couple of Harvard Business Review papers on this topic and I found a very simple explanation: ‘culture is the social order of an organisation. It shapes attitudes and behaviours.’ It continues like this: ‘when properly aligned with personal drives, values and needs, culture can unleash tremendous amounts of energy towards a shared purpose and foster an organization’s capacity to thrive’. There is a lot of research that suggest when aligned with strategy and leadership, a strong culture drives positive organisational outcomes
How to create a culture with an appetite for sales
Currently, the ‘learning culture’ is very popular. Many corporates are investing a lot of money in upskilling their staff, while also encouraging every associate to embrace ‘learning’ in every aspect of their work. The one-million-dollar question is of course how we should create a culture with a healthy appetite for sales. Unfortunately, there is no one size fits all answer; every organisation is different, it’s not possible to simply take out a handbook and start implementing these practices. However, there is definitely a fundamental option; creating a culture of commitment and ownership. If the associates within a department are committed to achieve the companies or departments’ goals, the beginning starts here.
Conclusion: start investing in culture
Are you working for an organisation or department with a lot of KPI’s, driven by managers with a micromanagement playbook? It’s time to step up. Try talking to one of the leaders and try convincing him or her to start discussing about a cultural transformation. While cultural change only works when everyone in the organisation embraces this, cultural change can be only initiated from the top. Although one could definitely find some bottom up driven examples of cultural change, it mostly works when it’s initiated by someone from leadership.
