AIRticulate

Sales Culture Rule 1: Link Incentives to Performance, but Look Beyond the Numbers.

“Even a broken clock is right twice a day.”

No, really. It is.

Airline industry sales, at most levels, are less incentive-driven than many other industries (at least in terms of commission as a proportion of overall salary). While I can’t tell you exactly why this is, I can hypothesize two theories.  Perhaps it has something to do with the perception that a sales force has its hands tied to externalities in this industry more than most others, although if this is really any justification, you could make an entirely new argument altogether that a sales force isn’t really essential. But, agree or disagree, that would be another discussion for another day. A more likely scenario is that the lack of an incentive-heavy structure is designed to bring an air of certainty to the brave souls who risk the constant uncertainty of this profession. If this has any truth, it is surely of noble purpose. But whatever the reason for it, the absence of a real, quantifiable performance management structure certainly creates some inefficiencies in the sales force, at least among that majority of individuals who, without that carrot in front of them, lack the drive to reach their full potential. It’s 4 o’clock and I’m tired….what is making that extra call going to do for me?

I believe that to maximize efficiency, the compensation of a sales force at all levels needs to be linked to performance.  By no means am I suggesting paltry base salaries–I do see the need to offer some reasonable stability to folks who have made this their life’s work–but not having performance linked to compensation in any way creates a breeding ground for lazy habits.  That being said, I think it takes a bit of creativity to create the rightincentive structure.  This may sound elementary, but I believe that if you set fair base salaries, incentive pay should not just be linked to achieving a quantifiable result, but by being able to explain how that result was achieved (perhaps to a committee made up of individuals from various departments and grade levels, which would rotate regularly).  Throwing crap at a wall to see what sticks is not, in my opinion, grounds for ‘above and beyond’ reward. Nor is dropping fares so low that you reach a sales quota, but have violated your yield so much that you aren’t operating the flights profitably (and you surely wouldn’t explain that to your director).

In short, achieving your goal, without the ability to explain how you did it, should warrant a smaller incentive payout than the same result with the ability to demonstrate how your strategic approach worked.  I’ve seen far too many cases where a particular target was met for the sheer fact that the particular carrier’s service was the only game in town, or solely based on the work of the pricing or revenue management department.  In cases like these, the incentive should go to the party responsible, which I believe can be uncovered fairly easily by requiring various units of the organization to hold strategy review sessions occasionally and present those strategies.

While this process would introduce some subjectivity back into a process that many in this industry would like to be black and white, I don’t think that’s a bad thing. After all, every process that builds a business–from inception to business planning to hiring to promoting to negotiating and selling–depends on some degree of subjective determination. So why can’t performance management? By introducing a tiered incentive structure, whereby an airline can keep fair base salaries, but offer different tiers of incentives based only partially on achieving a particular measurable, but even more on being able to explain how that was achieved, I believe that an added level of both competition (which, in moderation, is not a bad thing) as well as collaboration (after you, if your incentives are linked to a team-based goal, you are going to do what is right to achieve that) would become essential foundations for the sales culture. See my example:

By emphasizing the qualitative over the quantitative, the carrier can also avert building a culture of lazy habits. When financial reward is tied strictly to a particular quantifier, setting the bar too low causes people to “coast” once they realize the target is going to be achieved. And if it’s set too high, which is sometimes necessary to push a staff or individual to maximum potential, the smartest and most competent people are the ones who are going to realize that the incentive is unlikely to be earned and jump ship at the first opportunity, leaving the carrier with the leftovers.

This would not be an easy process to implement, and would surely take some time–but that would be a good thing. Performance management does not happen enough in this industry, with lip service only recently being paid to things like Key Performance Indicators (KPIs). This process would require managers to sit down with their staffs individually, set non-generic, targeted and measurable goals for each individual to achieve (which is good management), and then reward them based on what they did you achieve the results they did. This would certainly provide a much-needed jolt of life into the sales force, and create an environment where the brightest minds and most innovative and driven sales people would be uncovered while the frauds would be exposed.

 

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