Retail Sales Coach: Daniel Pink’s Drive Vs. Employee Commissions

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I’m about to do something heretical. Dangerous. Against the tide.

Here goes… 

I read Daniel Pink’s bestseller Drive: The Surprising Truth About What Motivates Us and didn’t believe it.

There, I said it.

Those of you who love it, good for you.

His overarching idea is that carrot and stick rewards or Motivation 2.0 as he calls it, doesn’t work for anything but routine or piece work.

He posits that in certain places, like highly paid design firms and computer software engineers, once they have been paid well, such measures hurt performance. Again folks, he’s talking about creative types who, I expect make very good salaries.

How such a niche segment of business is illuminated as the general way to build a business or how it is applicable to retail I just don’t see.

Precisely for the fact that retail in general does not pay well - many employees are paid hourly or salary with a bonus structure to help reward those who are doing the job.  Pink talks about a need for autonomy-control over their time, mastery-seeing something gets done, purpose-something bigger than ourselves. Those are all great.

But…

With all the scientific facts Pink lays out I just don’t buy it for retail sales.

His toolkit at the end carries this advice, “Pay more than average so you take money off the table…  The more prominent salary, perks and benefits are in someone’s work life, the more they inhibit creativity and unravel performance.”

I’m sure if we were talking about the Walt Disney company or Intel or IBM, paying more than average keeps top talent from jumping ship – agreed. But  people who work retail are rarely in it for anything but the money – and the employee discounts. I have never seen paying top dollar to someone without them being able to make sales.

Many will read Drive and think rewards, perks and commissions are bad.

But retail is a performance-based system – or it should be.

In an environment where employees are not satisfied at work, where demands are higher and work has become less interesting, we have to do something to get them to perform.

It may be old-school but commission sales can be a motivating force to reward the Driver and Expressive personalities for their risk at trying to make the sale.

In other words, you can’t tap into their intrinsic need to do more without the pay carrot. That’s why I think you need to commission their sales in some manner.

How to pay retail sales commissions?

There are many ways:

• Set a goal for number of widgets someone sells in a month.
• Set a goal of a % over last year.
• Set a goal based on  % over last month.
• Set a goal based on average ticket.

To try to make it fair, make sure you:

• Set a minimum threshold of number of hours worked.
• Have two platforms – one for the crew working full-time and those working part-time.
• Only reward if the store hits its sales goal

Here’s how to do it:

During the last week of the month,  set a store goal for the upcoming month. Then make up a schedule for that month with every employee’s (but not the manager’s) daily schedule and hours. Give the manager a goal of 15-20% of the total. That’s high but that’s why they are the highest paid. Then take the remainder of the store goal and divide it by the total number of hours everyone but the manager is working. Then multiply that back by the individual hours each employee works to arrive at their personal goal.

For example, your store did $100,000 last March so this year you’ll make the goal $105,000. That means your manager has to sell $21,000 during the month, the rest of the staff has to sell $78,750. When you add up your individual employees projected hours, let’s say they come to 680 so your employees, to hit goal tentatively have to sell $115.80 each hour. If Jane works 46 hours that month, her goal would be $5,327.

Readjust the goal at the 15th because not everyone will work their schedule. Do it again two days before the end of the month which locks in their goals. Then if the store hits goal, the bonus system kicks in; whatever program that is for your commission, spiff, bonus, etc.

Employees who are consistently helping you make your goal get raises. Those that don’t, don’t.

That is counter to what Mr. Pink says, but what we are looking for on the sales floor is old-school performance. We both agree that the idea of getting out of their way and recognizing progress and tapping into intrinsic internal motivation just can’t happen unless the pay is right.

What do you say? Am I wrong?

The Retail Doctor® has been around since 1994 helping all sizes of businesses increase sales. His speeches inspire and educate audiences with a frank style that helps attendees do more to provide an exceptional experience to their customers and employees. You can find out more here.

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