The High Cost of Cutting Sales Incentives: A Cautionary Tale

In the high-stakes world of sales, the motivation and performance of a sales team can often be the heartbeat of a company’s success. Sales incentives, carefully structured and deployed, serve not only as motivation but also as recognition of the hard work and achievement of sales goals. However, a disturbing trend has emerged in some circles, where sales managers, in a misdirected attempt to increase their own earnings, slash these very incentives, not realizing the dire consequences that often follow.

Misguided Management Moves

The rationale behind cutting sales team incentives might seem straightforward from a purely spreadsheet-driven perspective. Reduce the upfront costs, and perhaps, theoretically, you improve your department’s profitability. However, this approach is myopic and profoundly misunderstands the essence of what drives sales success.

Take, for example, the case of a sales manager I know personally. Eager to impress corporate with improved profitability, he decided to cut the commission plan of his team, including that of his top performer. This decision, far from improving the situation, led directly to a dramatic decline in team morale, an exodus of talent, and, ultimately, a devastating impact on the company’s bottom line. Where there once was thriving energy and a drive to exceed targets, there suddenly was resentment and disengagement. Not long after, the company faced severe financial difficulties.