If you haven’t been hiding under a rock for the last few weeks you’ll have noticed that there’s a big uproar going on with regards to Stephen Hester, Chief Executive of RBS, turning down his £1m bonus. Well, I’m sure everyone has got an opinion on whether or not he should have turned the bonus down and indeed, whether he should have even been offered the bonus in the first instance.
However, when I first heard the story on the radio I started thinking about the bonuses and commission we receive as recruitment consultants or as people in sales positions.
As a recruitment agency which specialises in placing people in sales jobs, we’re well aware how a good commission structure and bonus scheme can drive and motivate people to sell. If you are of this school of thought then maybe you think that it’s the case that Hester DID deserve a bonus? The way I see it, if a salesperson is doing a good job, then he’s guaranteed to earn more money and in turn this motivates him to continue to do a good job. Could this also be applied to Hester? For example, surely getting a bonus in shares should be considered a good thing! Look at it like this – if he did a rubbish job, the value in shares would go down so he’d inevitably be taking money out of his own pockets. Obviously, like any good salesperson, he’d want to do a good job and thus accrue more shares. Makes sense right?
And it’s the same in any sales job.
If someone is doing well and earning a lot of money for their company, then it stands to reason that they should earn a proportion of what they billed for their company by way of commission or bonus payment.
On the other hand, how about if you or your company aren’t doing so well? For example, reading an article on Hester rejecting his bonus, I was reminded of a time not so long ago when the credit crunch was in full swing. As the recruitment industry was hit hard and consultants struggled to sell their services to businesses up and down the country my colleagues and I were offered a solution to the impending doom of redundancy; namely four day weeks. Those of us still lucky enough to be in a job agreed to work reduced hours in order to keep our company afloat. However, rather than reduce commission payments our Director decided it might be a better idea to scrap the commission threshold and offer a non capped commission scheme for a brief period whereby any consultants who billed would earn commission on their placement, regardless of the fee.
This turned out to be an effective way to incentivise people and raise morale. Especially in a climate where freezes on recruitment were high in most industries and businesses sought to pay out as little of their profits as possible.
But how about the flip side? Would you, as a sales person, be prepared to give up your commission or bonus for what could be termed as the “greater good”? For example, if you’re business were floundering, as a devoted employee, would you forgo any commission payments in order to see your company survive?
Furthermore, should companies funded by the tax payer even be allowed to pay bonuses until their debt to the tax payer is repaid?
Would you ever give up your bonus for a year like Stephen Hester? If not, why not? And if you would, well, we’d REALLY like to know the reasons behind that!
Executive Network Sales Ltd specialises in sales vacancies and associated positions at all levels across a range of niche sectors throughout the UK.