Ivan Petrovich Pavlov was a Russian physician who won the Nobel prize for Medicine in 1904.  He is credited with first describing a psychological phenomena called Classical conditioning. Why is this relevant to you, the readers of this blog (other than being a completely useless piece of trivia that if brought up on a nice evening with the opposite sex, will definitely end the night for you  at almost any party outside a university town)? Well Pavlov had a dog, and he observed that the dog would begin salivating before food was presented to it. He used various triggers to generate the response from the animal including bells, etc. None of which the animal could directly eat. Thus by ringing a bell he could get the dog to salivate, even though biologically there was no reason to do so as the animal had no access to food. End of history lesson.

Pavlov figured out something that we in the sales world intuitively understand that you can manipulate behaviors by tying a stimulus to a reward. This is fundamentally what a commission plan is intended to do. The challenge is as with Pavlov's dog there are certain fundamental principles that must be maintained in order for the reinforcement to be successful. It is here that many commission systems fall down. If the plan is either too complex, or  not transparent (ie. the sales people don't trust that the reward is coming), or the rewards are inconsistent. You will fail to generate the behavior you want as business managers.

So what are the rules?

1.  You must consistently reward the behavior you are looking for. Changing the plan, inconsistent application, adding new rules,etc will work against the behaviors you are looking to create.  Exceptions, "special circumstances" etc all work against an effective commission plan as they show reps that its not simply about performance its also about successful lobbying. That is not to say never make exceptions but be sure you know why you are making them and communicate clearly to everyone those reasons.

2. Timing- The reward must be given within a close time period with the action. If you delay the reward to far from the behavior you are looking to reinforce, the sales people wont know which behavior you are rewarding. This is a classic mistake with many plans.  In an attempt to protect against downside risk many organizations delay the reward.  It is much more successful to give the reward and then punish negative behavior through claw backs (ie. negative reinforcement).

3. Transparency- Reps must know and understand the rules. Many organizations don't take the time to explain to reps how to max out the comp plan. This actually works against the results you are trying to achieve. If you are able to explain to sales people what are the behaviors that are going to be rewarded you are much more likely to get them in the form you are looking for. As opposed to some bastardized version that they come up with themselves.

In previous posts I have spoken about how to use multiple levers to manipulate results. The key is that in the creation of your plan be sure in the quest to achieve your business goals you don't violate these rules. Its always better to simplify the plan and get consistent results than have a more  complex plan that is generating inconsistent results.  Think like Pavlov and your results will be Nobel prize worthy!

Moment of Zen
"The secret of success behind all men of achievement, lies in the faculty of applying their intellect in all their activities, without being mislead by any surging emotions or feelings. The secret of success in life lies in keeping the head above the storms of the heart."-Swami Chinmayananda

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