Week ending 26th July 2013

Bound to end in tears

China provides a news item most weeks but last week was a little different.  Instead of the focus being on the economy the big headline was about the accusations from the Chinese authorities that GSK executives in China had been bribing doctors and other medical professionals to prescribe GSK drugs.  This caused me to think about the nature of selling and sales people.

For many years there has been a school of thought amongst many business leaders and especially sales managements that sales people are primarily motivated by money and status.  The money being both the means of acquiring and of demonstrating status.  So generous sales commission schemes are devised often including other “perks” such as top of the range company vehicles and access to exclusive events in the name of corporate entertaining.  In many sales driven businesses such as the drug companies, computer systems and banks in recent years, sales people are seen as the king and queen pins and their reward packages and status in the company reflect this.

This has bred a culture where as long as you got the sale any questionable practices around how you got the sale would be overlooked or even encouraged.  If you incentivise people to earn a lot of money in a short time don’t be surprised if that is exactly what they go and do.  And, don’t be surprised about HOW they go about doing it!  Because it is all about money, moral and ethical considerations just get lost.

I believe GSK’s Chief Exec Andrew Witty is genuinely disappointed and shocked by what some of his people in China have been up to.  However when he looks closer he should not be surprised.  The cause and effect from the incentives for his sales people in an environment where medical professionals cannot make a decent living unless they accept kickbacks meant it was bound to happen.  What is more this is a classic example of how unethical practices will eventually turn round and bite you.  When appointed earlier this year President Xi Jinping announced that cracking down on corruption would be a priority for his administration.  So a crackdown involving a high profile foreign owned global business is just what the Chinese authorities would have wished for and will use to maximum effect.

Is there another way?

This leaves us with a question, just how do you motivate sales people?  If financial reward carries the risk of encouraging bad practices with expensive consequences just how do you get your sales force out of bed in the morning?

In my career I have come across a number of very successful sales people who do not seem to be motivated primarily by money.  Because they are successful they earn plenty of it, but it does not seem to have been their primary motivation for working hard and winning business.

What they seem to have in common is the conscious or unconscious understanding that selling is about understanding the customer’s problem first and then offering a solution.  They seem to be particularly skilled in “needs identification”, really getting to understand the customer’s needs and in many cases helping the customer to understand what their needs really are, as opposed to what they think they are.  These kinds of sales people seem to get a real buzz out of how this builds relationships with their customers and how this in turn drives sales success.

This switches the focus away from me and my needs on to the customer and their needs and this is what changes the moral and ethical dimensions in the relationship.  The process changes from “selling to” to “getting bought by”.  Ah, I hear you say what if the customer’s need includes a free holiday in the Bahamas?  However sales people who “get bought” seem to have the ability to differentiate between the needs of the customer as opposed to the personal needs of the individual buyers involved.  They seem to be able to spot when these cross the line when a buyer’s personal needs and motivations may be detrimental to the customer’s needs.  They become skilled in handling these situations, including being prepared to walk away from “bad business”.

Sales people who “get bought” invariably in my experience are amongst the top performers in most sales forces. However when they are successful a strange thing can happen.  Far from encouraging them to keep on doing whatever it is they are doing, their employers start making life harder for them.  Because they are earning lots of money from a commission structure designed to motivate the average performer to work a bit harder, they find their targets are increased whilst others are left alone.  They are required to report to managers who are far less experienced and competent than they are.  Often this involves them being subjected to sales performance management systems that have little to do with sales or performance management.

Inevitably this leads to these top performers leaving, either to retire early, join a competitor or set up their own business in competition with their previous employer.  Often this means they take the business with them because they have the relationship with the customers, their employer doesn’t.  They also know what their customers did not like about their previous employer’s offer, giving them an immediate competitive edge if they set up their own business.

Why does this happen?  Well I believe this is a demonstration of what happens when opposing moral and ethical outlooks collide.  The people who understand that doing the right thing and doing it really well delivers the best results vs. those who believe that doing whatever it takes to deliver results for them and now is the way to do things.  The lessons only get learnt when the consequences of the latter approach become apparent, possibly in the shape of a Chinese anti-corruption official.  By which time of course it is too late!

So that was some of the week before this week. We hope you found some of the above thought provoking and useful for you and your business. We trust you had a good weekend and hope you have a great week this week.