Death of a salesman
August 20, 2008 12:39 PM Subscribe
Why do some successful salesmen get fired by their employers after a really big commission sale? Logically, one would suppose that employers would want to keep talented salesmen. What incentives would an employer have to do so?
They could suspect the deal isn't all above board, but can't prove their suspicions, and so are just getting rid of a potential future problem.
They could believe that they can get 2 people paid much less, for the same amount of sales, at a significantly lower tier in the incentive structure.
It could be a personal dispute. Not all business decisions are made with pure logic in mind.
Details are needed indeed.
posted by nomisxid at 12:50 PM on August 20, 2008
They could believe that they can get 2 people paid much less, for the same amount of sales, at a significantly lower tier in the incentive structure.
It could be a personal dispute. Not all business decisions are made with pure logic in mind.
Details are needed indeed.
posted by nomisxid at 12:50 PM on August 20, 2008
Best answer: I'm not in sales myself, but the reasoning is that some salesmen are hired purely on their contacts in a potential customer. Once that sale is complete, there may not be any purpose for that company to continue employing that salesman, so they are fired.
Sales is less a function of skill, it's a function of motivation; hence the emphasis on commissions.
posted by meowzilla at 1:02 PM on August 20, 2008 [2 favorites]
Sales is less a function of skill, it's a function of motivation; hence the emphasis on commissions.
posted by meowzilla at 1:02 PM on August 20, 2008 [2 favorites]
It depends largely on the industry. The kind of industry wherein salespeople might be fired just after a large sale are industries wherein sales tend to happen more rarely and are much larger.
My sense, anyhow, is that it's tempting for management to believe that sales is not a skill or a talent or a range of expertise so much as a simple knack, and that, given the right situation, nearly any intelligent person can play the role of a salesperson.
I tend to agree with them. The role that skill plays in sales is dramatically overrated, and the role of luck is dramatically underrated. This is often because salespeople are increasingly apt to tell themselves over and over and over again that anyone can do anything so long as they believe it hard enough, starving homeless and terminal illness to the contrary.
posted by koeselitz at 1:11 PM on August 20, 2008 [1 favorite]
My sense, anyhow, is that it's tempting for management to believe that sales is not a skill or a talent or a range of expertise so much as a simple knack, and that, given the right situation, nearly any intelligent person can play the role of a salesperson.
I tend to agree with them. The role that skill plays in sales is dramatically overrated, and the role of luck is dramatically underrated. This is often because salespeople are increasingly apt to tell themselves over and over and over again that anyone can do anything so long as they believe it hard enough, starving homeless and terminal illness to the contrary.
posted by koeselitz at 1:11 PM on August 20, 2008 [1 favorite]
Best answer: It could be that management had wanted to fire the salesperson earlier, but held off so as to not jeopardize the sale. Once the customer signed on the dotted line, there was no risk in letting the salesperson go.
posted by a young man in spats at 1:19 PM on August 20, 2008 [3 favorites]
posted by a young man in spats at 1:19 PM on August 20, 2008 [3 favorites]
There are lot of reasons, but I can't think of a good reason.
posted by xammerboy at 1:29 PM on August 20, 2008
posted by xammerboy at 1:29 PM on August 20, 2008
I once had a phone fundraising job with a nationally known arts organization, with both hourly pay and performance bonuses. I didn't get fired for doing too well, but in the midst of my tenure there the bonus structure for the whole phone staff was revised downward, specifically because my performance was such that I'd been earning around $25 an hour under the original bonus plan. I was told that that was more than they could pay part-time phone staff, regardless of performance. (It may be worth noting that I didn't bring in a single, huge gift, rather a number of large ones.)
FWIW, I disagree about the role of skill, at least in the kind of work I was doing, which has a lot in common with many sales jobs. Luck and motivation are factors, sure, but when a few employees consistently outperform others given random lists of leads drawn from the same pool, skill is what makes the difference. It isn't about idiotic gung-ho attitude, either, but about knowing how to talk to people in a way that is both persuasive and respectful.
posted by FrauMaschine at 1:34 PM on August 20, 2008
FWIW, I disagree about the role of skill, at least in the kind of work I was doing, which has a lot in common with many sales jobs. Luck and motivation are factors, sure, but when a few employees consistently outperform others given random lists of leads drawn from the same pool, skill is what makes the difference. It isn't about idiotic gung-ho attitude, either, but about knowing how to talk to people in a way that is both persuasive and respectful.
posted by FrauMaschine at 1:34 PM on August 20, 2008
I'd think a young man in spats has it...the firing was likely already in the works.
Also, having worked in sales many years ago, I'm inclined to disagree with koeselitz. A talented salesperson can run circles around someone who doesn't have the knack, and some people will never be good at sales no matter how much training they receive.
posted by JaredSeth at 1:36 PM on August 20, 2008
Also, having worked in sales many years ago, I'm inclined to disagree with koeselitz. A talented salesperson can run circles around someone who doesn't have the knack, and some people will never be good at sales no matter how much training they receive.
posted by JaredSeth at 1:36 PM on August 20, 2008
Logically, one would suppose that employers would want to keep talented salesmen. What incentives would an employer have to do so?
I have a friend in sales that has been earning his "max" commission the last couple years. If not for procrastination, he would have left to find a sales job with a higher ceiling. It would not surprise me at all if his employer decided to fire him--he's over-qualified for his job and not exactly energetic. Some employers embrace the theory that you want 'em young, poor and hungry.
posted by mullacc at 1:39 PM on August 20, 2008
I have a friend in sales that has been earning his "max" commission the last couple years. If not for procrastination, he would have left to find a sales job with a higher ceiling. It would not surprise me at all if his employer decided to fire him--he's over-qualified for his job and not exactly energetic. Some employers embrace the theory that you want 'em young, poor and hungry.
posted by mullacc at 1:39 PM on August 20, 2008
koeselitz is an ignoramus. I have 30 years of observational experience, and without question there are top 20% of sales people who bring to the job both general excellence (energy, intelligence, organizational skills, etc.) and the skills particularly valuable to sales (charm, empathy, tenacity, communication skills, and whatever you call the ability to listen to absolute crap from customers with a polite smile on your face and respond calmly.)
But I digress.
No rational management would fire a top sales performer, unless there were other issues. So either management is irrational (You've seen people sabotage their marriages, relationships with their children, etc? Well, it doesn't stop at home. "I don't care. I never liked that guy. Get rid of him") Or there's other issues: HR problems, expense fiddling or kickbacks or other forms of corruption, etc.
What management typically does to top performers is cut their commission rate, so they have to increase their contribution to the company to make the same compensation. Then the salespeople leave and management wonders why the division is missing its forecast. (See above comment regarding irrationality.)
posted by mojohand at 3:09 PM on August 20, 2008
But I digress.
No rational management would fire a top sales performer, unless there were other issues. So either management is irrational (You've seen people sabotage their marriages, relationships with their children, etc? Well, it doesn't stop at home. "I don't care. I never liked that guy. Get rid of him") Or there's other issues: HR problems, expense fiddling or kickbacks or other forms of corruption, etc.
What management typically does to top performers is cut their commission rate, so they have to increase their contribution to the company to make the same compensation. Then the salespeople leave and management wonders why the division is missing its forecast. (See above comment regarding irrationality.)
posted by mojohand at 3:09 PM on August 20, 2008
I wish to revise my first sentence in the answer above to: I believe koeselitz to be mistaken on this issue.
It's been a long day.
posted by mojohand at 3:21 PM on August 20, 2008 [1 favorite]
It's been a long day.
posted by mojohand at 3:21 PM on August 20, 2008 [1 favorite]
Seconding mojohand : the best sales personnel are not lucky, any more than the best teachers, lawyers, or truffle hunters. They know their craft, and know it well; much better than their more ordinary competition.
I worked at a hellhole where the boss quibbled about paying the full sales commission on a $300k sale. His quote was something like, "Well, they were going to buy from us anyway, so why should I just give you $60k?"
(Answer: because the brilliant salesman who helped win you that customer approval will just walk to your competitor, and take his black book with him, and stories of all your mismanagement.)
posted by IAmBroom at 3:23 PM on August 20, 2008
I worked at a hellhole where the boss quibbled about paying the full sales commission on a $300k sale. His quote was something like, "Well, they were going to buy from us anyway, so why should I just give you $60k?"
(Answer: because the brilliant salesman who helped win you that customer approval will just walk to your competitor, and take his black book with him, and stories of all your mismanagement.)
posted by IAmBroom at 3:23 PM on August 20, 2008
Best answer: The problem is in thinking there's logic in this sort of decision. My boss at one job was a woman who'd left her previous job after racking up record sales and being told that because she'd be earning "too much" from her commission had it cut back by her manager. Jealousy, workplace politics and so on can all be powerful factors.
If there was a rational reason - well, I can think of several. The biggest beef I've seen with sales staff in various workplaces is when they crank out sales that are good for them but bad for the organisation - big commissions for the salescritter, but without enough margin to allow the company to deliver on the promises without losing money.
posted by rodgerd at 3:58 PM on August 20, 2008
If there was a rational reason - well, I can think of several. The biggest beef I've seen with sales staff in various workplaces is when they crank out sales that are good for them but bad for the organisation - big commissions for the salescritter, but without enough margin to allow the company to deliver on the promises without losing money.
posted by rodgerd at 3:58 PM on August 20, 2008
I coud possibly see the following scenario:
WidgetTech is a small, up and coming producer of widgets. Being new to the widget game, they need to get market share quickly but might not have a lot of money to spend on sales staff. So they hire one or two salespeople who work strictly/largely on commissions. It works out well for the organization; they aren't risking much base salary on the salesperson. The salesperson could also make a phenomenal amount of money if sales are brisk, but the expectation is that it will be hard to eke out sales during these hungry years.
Joe Salesguy is an incredibly talented salesman hired by WidgetTech to sell widgets, and happens to be very good at his job. After a few years, WidgetTech is now an established widget producer, with quite a name in the widget market. The prices on their widgets has now gone up substantially. People who are not even customers of WidgetTech are now calling into the organization interested in buying from them.
WidgetTech runs the numbers one day and gets to thinking that the enormous commissions they are paying Joe Salesguy are no longer in line with the "difficulty" of selling widgets. They could bring in a new salesperson who will make much less in commission and pocket the difference. But it's difficult to renegotiate Joe Salesguy's contract, and doing so may hurt the morale of the other salespeople at WidgetTech. So they think up some reason to fire Joe Salesguy, hire a new salesperson, and go on their way.
This may not be SMART business practice, but it could happen.
posted by sherlockt at 4:58 PM on August 20, 2008
WidgetTech is a small, up and coming producer of widgets. Being new to the widget game, they need to get market share quickly but might not have a lot of money to spend on sales staff. So they hire one or two salespeople who work strictly/largely on commissions. It works out well for the organization; they aren't risking much base salary on the salesperson. The salesperson could also make a phenomenal amount of money if sales are brisk, but the expectation is that it will be hard to eke out sales during these hungry years.
Joe Salesguy is an incredibly talented salesman hired by WidgetTech to sell widgets, and happens to be very good at his job. After a few years, WidgetTech is now an established widget producer, with quite a name in the widget market. The prices on their widgets has now gone up substantially. People who are not even customers of WidgetTech are now calling into the organization interested in buying from them.
WidgetTech runs the numbers one day and gets to thinking that the enormous commissions they are paying Joe Salesguy are no longer in line with the "difficulty" of selling widgets. They could bring in a new salesperson who will make much less in commission and pocket the difference. But it's difficult to renegotiate Joe Salesguy's contract, and doing so may hurt the morale of the other salespeople at WidgetTech. So they think up some reason to fire Joe Salesguy, hire a new salesperson, and go on their way.
This may not be SMART business practice, but it could happen.
posted by sherlockt at 4:58 PM on August 20, 2008
The biggest beef I've seen with sales staff in various workplaces is when they crank out sales that are good for them but bad for the organisation - big commissions for the salescritter, but without enough margin to allow the company to deliver on the promises without losing money.
Good LORD yes.
posted by Netzapper at 5:35 PM on August 20, 2008
Good LORD yes.
posted by Netzapper at 5:35 PM on August 20, 2008
Response by poster: I appreciate your excellent responses. I think I should have framed the question better by making the distinction between working in sales for a privately held company versus a publicly held one. The differences may be larger because of the entity incentives. However, by making blanket assumptions, I believe many scenarios were covered with great answers.
posted by Zipf at 7:03 AM on August 22, 2008
posted by Zipf at 7:03 AM on August 22, 2008
This thread is closed to new comments.
posted by MrMoonPie at 12:45 PM on August 20, 2008