Change: What’s stopping us? We have been successful with our current model for decades the thinking goes – so why should we change now when the result could be that we do not make our budgets and quotas? Strategy guru Gary Hamel has dryly noted that strategy appears “easy” only if you copy someone else’s. But copying someone else’s strategy is potentially the riskiest strategy of all. Despite all our affection for concepts like innovation and entrepreneurship, however, we are often strikingly risk averse, even when we’re dissatisfied with the status quo. We fear the negative consequences of risk, even as we ignore the even more negative consequences of staying the course. We need to reassess risk and then take a prudent risk on risk.
Understanding cognitive biases
Following are some of the more common cognitive biases on why we continue with 100% commission and rule out the possibility of a better system.
• Selective search for evidence. We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions.
• Premature termination of search for evidence – We tend to accept the first alternative that looks like it might work. The first alternative is usually the system that has been passed on to us (100% commission) or a minor alteration of the same.
• Inertia – Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.
• Selective perception – We actively screen-out information that we do not think is important.
• Wishful thinking or optimism bias – We tend to want to see things in a positive light and this can distort our perception and thinking.
• Choice-supportive bias occurs when we distort our memories of chosen and rejected options to make the chosen options seem more attractive.
• Recentcy – We tend to place more attention on more recent information and either ignore or forget more distant information.
• Repetition bias – A willingness to believe what we have been told most often and by the greatest number of different of sources.
• Anchoring and adjustment – Decisions are unduly influenced by initial information that shapes our view of subsequent information.
• Group think – Peer pressure to conform to the opinions held by the group.
• Source credibility bias – We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.
• Incremental decision making and escalating commitment – We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions.
• Attribution asymmetry – We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other’s success to good luck, and their failures to their mistakes.
• Role fulfillment (Self Fulfilling Prophecy) – We conform to the decision making expectations that others have of someone in our position.
• Underestimating uncertainty and the illusion of control – We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do. We believe we have control to minimize potential problems in our decisions.
So you can see what you are up against in your mind and with your associates in attempting to develop a better system of compensation.
Delayed gratification
If someone offers you a choice between receiving $100 one month from now and $120 two months from now, what would you do? Studies have found most people will wait for the larger sum of money.
Now, suppose someone offered you $100 right now or $120 one month from now, which would you choose? In this case, studies have shown most people will choose the $100 right now. Rationally, the two choices appear the same; you get a benefit from waiting one month longer. In practice they don’t feel the same because the money becomes available immediately; psychologists say the automatic sense is engaged. In the first choice, waiting the extra month made sense in the called the reflective sense.
Most of us would prefer the reflective sense choices in life because of the long term benefits that accrue from making these decisions. But what can we do to move toward making choices and decisions this way? Get rid of straight commission.
How many times have we taken call-in accounts and aired their poorly planned campaigns with the belief that the schedule and creative wouldn’t work really well for the client (don’t be embarrassed, we have all done it as salespeople)? How many times have we sold campaigns that were insufficiently weighted or over weighted to be effective or efficient? Our reflective sense realizes it would be better for both the client and ourselves to do the due diligence required to design and launch a successful campaign but our automatic response tells us we’d rather have the order (with its resulting commission or budget achievement) right now. We know with our reflective sense that a campaign that works well for our clients will yield us a long term customer and that an ineffective campaign will bring us long term pain: the client will not become a repeat customer and will tell everyone who will listen that radio doesn’t work.
Budget and Quota Requirements
It is important to have budgets and quotas for many reasons: finance people to do their forecasting, planning for staff levels and purchasing to name just a few. The problem is budgets and quotas force salespeople to do whatever it takes to meet them – so they sometimes execute questionable tactics in order to “take whatever we can get”.
What you know about motivation is wrong
According to Dr. Daniel H. Pink in his book “Drive: The Surprising Truth About What Motivates Us,” forget everything you thought you knew about how to motivate people–at work, at school, at home.
It’s wrong.
As Daniel H. Pink explains, the secret to high performance and satisfaction in today’s world is the deeply human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world.
The revelations he shares were generated by a five-year research project that involved thousands of test groups and individuals as well as dozens of research associates. Also drawing upon the abundance of research by several behavioral scientists and their four decades of scientific research on human motivation, Dr. Pink exposes the mismatch between what science knows and what the radio business does – and how that affects every aspect of our lives.
Today, you just can’t motivate people from outside. Motivation is internal. He demonstrates that while the old-fashioned “carrot-and-stick” approach worked successfully in the 20th century, it’s precisely the wrong way to motivate people for today’s challenges. In Drive, he reveals the three elements of true motivation:
1. Autonomy – the desire to direct our own lives
2. Mastery – the urge to get better and better at something that matters
3. Purpose – the yearning to do what we do in the service of something larger than ourselves
The key point is that people respond to more than just money in getting their work done. And the more you need someone to use all their resources, the more money actually becomes a hurdle to success rather than an aid . . . by narrowing focus too much. More about this in a moment.
Motivated People aren’t born
Pink has many other relevant insights. There is a distinction about what truly motivated people behavior is…and isn’t:
? It is made, not born
? almost always outperforms “carrot and stick” people in the long run
? does not disdain money or recognition
? is a renewable resource
? promotes greater physical and mental well-being
? is self-directed
? devoted to becoming better and better at something that matters
? connects the quest for excellence with a larger picture
In stunning contrast, carrot-and-stick people are “fueled more by extrinsic desires than intrinsic ones. It concerns itself less with the inherent satisfaction of an activity and more with the external rewards to which that activity leads”.
According to Pink, begin with a carrot-and-stick mindset and mastery is impossible. Begin with truly motivated people and it can be inevitable.
The rich get richer
As well documented as Dr. Pink’s points are, don’t expect stations to quickly switch over to encouraging autonomy, mastery, and purpose instead of paying big commissions and bonuses. Carrots and sticks involving money are in place because they pay well for those on the receiving end . . . not because they reward shareholders well.
Attribution Error
The idea that sales people are different to the rest of us is based on what psychologists call a fundamental attribution error. We tend to explain other people’s behaviors differently to our own. For example, I was late this morning because my alarm didn’t go off. But you were late because you’re lazy. In the first case, I blame the situation. In the second, I blame your personality. Similarly, I come to work because I love what I do. But you – and sales people – come to work because of the money. I am motivated by interesting work, the chance to make a difference and recognition by my peers. But you are motivated by cash.
Of course, some sales people do their jobs not because they enjoy them, but purely for the cash. Those people will, over time, leave. And that will be a good thing for radio
The laser-focus on money
This problem can occur where company executives have an opportunity to gain wealth. They get so focused on the money that they don’t see anything else.
In a very famous experiment on this subject, Daniel Simons and Christopher Chabris conducted a study at the University of Illinois that had shocking results. The subjects were asked to watch video of a basketball game, and, were tasked with one thing; counting the number of passes made by the players in white shirts only.
At one point on the video, someone in a gorilla suit walked through the group playing the game, and then stood in the middle of the screen before walking off again. Over half of the subjects watching MISSED the gorilla!
Our ability to notice things consciously is very, very limited. When the subjects had their attention riveted on certain things, it actually deleted those things that didn’t match, even when they were right in front of their face. The problem with this focus is our attention acts as a filter…a powerful filter! It can, and does, direct all resources to specific tasks and away from others and for sales people, they make a lot of mistakes that they wouldn’t if little money were involved.
Conclusion
All of this leads us to an obvious conclusion. If you are currently paying your sales force on a 100% commission plan, it is time to examine some alternatives.
–Neil Gallagher is a new-strategy consultant for Radio Management, Programming and Sales specializing in developing Revenue Sharing programs for radio stations. Neil is a successful former Divisional Radio Manager, Program Director, Account Executive and current Revenue Sharing Program Developer. He can be reached through his website www.neilgallagher.com.
