Inside Sales Telesales Tips Blog

Can I ethically take away commissions from my reps after the sale?

  

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Christine is an inside sales manager that has taken our inside sales training classes, and called me last month with an ethical dilemma. Her reps have been incorrectly coding their orders, and she has been asked by her upper management to take away portions or all of their commissions when they fail to adhere to order entry standards. She’s facing a dilemma of ethics, and she wants to know if it’s legal. 

I don’t dispense legal information here (always talk to a lawyer), but ethics aside, the issue we really have to address is one of motivation and team communication. 

To begin, every coding element Christine told me about was essential, so I agree with Management that it’s got to be done right. 

But here’s another take. The first time a commission is taken away or reduced, that rep might very well become a demotivated performer, whether the company knows it or not. The rep, if human nature is taken into effect, may then try to recoup that commission loss in any way possible, and it may not always be in a manner constructive to the success of the company. It might be intentionally working the fewest number of hours possible, doing the fewest tasks possible, or making the absolute minimum of call numbers (KPIs). The rep may also start looking for another position at another company. Multiply this by the number of reps losing commissions, and there’s potentially a huge performance issue looming within the inside sales team that goes well beyond coding orders correctly. 

I think there’s a better way to get people performing to standard, and it’s about rewarding good behavior instead of punitively taking away money. One approach could be to hold a monthly contest, with points awarded for every correctly-placed order. At the end of the month, the company buys dinner for the winning rep and a guest at a restaurant of his or her choosing. That’s just one of many possible positive approaches, and they all can be reinforced during weekly performance reviews, too.

I’m a real believer in getting people to WANT to do the right thing through positive reinforcement, rather than through punitive actions that erode the appreciation and respect that a company, in theory, would expect from its employees. Positive Reinforcement works wonders with workers, students, and children, while negative reinforcement has a deleterious effect that’s been written about in more books on organizational psychology than I can name.   

Many companies have a wonderful program for positive reinforcement called President’s Club, in which sales reps who exceed their sales quotas get to take a nice trip together each year to celebrate. Most of the time, each gets to invite a guest, too. And if the guest is a spouse or significant other, that individual reinforces positively the benefits of the sales reps working for the company, too, on a social level. This is motivational.