Boris Volpe, currently Chief Operating Officer of SAP CIS
In the 90s I was working as a regional manager in Siberia for a large American FMCG company. We were to launch a sales motivation program from scratch.
As I recall, American managers from the headquarters showed me a special matrix and told me they had introduced a successful salespersons motivation system based on this matrix in several countries. It had 30 KPI’s for merchandisers, and though I was a Doctor of Science in mathematics by that time, it appeared very vague and unclear to me.
In fact, I could hardly understand it. Those KPIs included demands for good appearance, punctuality, tidiness and good knowledge of the product. The Americans told me: “We will assess personal results including sales, and once a month we will pay bonuses based on these assessments. But every month we will change it. As the result of this system, salespeople will be strongly motivated compared to their prior poor performance. That will be a challenge”.
I told them honestly what I was thinking that this system wouldn’t fly because it’s too complex to be understood. But they simply told me: «Forget about it, just do it». Nevertheless, they promised me a meeting in two months to scrutinize the results of the experiment using solid statistics.
So we started doing it and gave people the matrixes. Some of them understood the system, but most of them didn’t. Those who understood that the most KPIs, for example, a good appearance, were easy to achieve, decided to build their work around them. They told themselves: “OK, it is hard to sell. But it’s easy to have good appearance, to come to work on time and to go through the sales route. So we’ll have 60% of money anyway, therefore we can be opportunistic”. So they were coming to work in neatly ironed pants, they came on time, with nice accounting forms filled in at home.
But in two months, when we calculated the results, weak profit&loss figures appeared. So I told my bosses: «Why not try to make every sales person an entrepreneur»? I suggested to make an entry barrier for salesmen to be admitted to work, you must come on time. Otherwise we simply won’t let you in. You must, as well, be neat and have everything you need with you. This is what you get salary for. And only if you meet these demands, you will go to the customers. And you will get your performance bonus from actual cash you bring from customers for what you sell every week.
"I have counted this bonus rate and found it very attractive. In addition, we have set a team bonus, which was based on 75% on personal achievement, and for 25% on team achievements."
"Before long we saw very positive results. Poor workers, those who liked working “at home” (i.e. faked their reports), started to retire, because they lost interest in their work. Besides, starting from 2nd week from when we launched this system, I began receiving letters from teamleaders where they asked for permission to let them work in the office during weekends. And they were even ready to pay storekeeper’s overtime from their own money. Salespeople started earning $1000-1500 monthly. At that time, in the 90s’, the average Russian salary was $150-300, so you can imagine their motivation. And the more they sold, the more our company benefited.
That was a case when I had not agreed with my bosses and worked on my own. But I frankly told them about it and later made a presentation based on our results. And it became the best practice which was replicated in other divisions of the company worldwide.
