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Compensation: Why It (Almost) Doesn’t Matter 81

time positive impact on
Millionaire
production; providing ever
Salespeople
greater amounts does not Herzberg’s theory is at play
multiply the production every day in the world of sales. In
gains accordingly. theory,any good salesperson with an
Compensation is the open-ended commission package and
same. Remove it (or a reasonable product should be a mil-
lionaire. Just sell,sell,sell! But every
reduce it below reasonable
rep has a level at which the compen-
expectations) and every-
sation satisfies the demand on his or
one is unhappy. Put it in
her time and energies and it eventual-
place and it’s time to move ly becomes more attractive to stop
on to other matters— selling and return to home and family.
there’s only so much
return to be gained from increasing compensation.
Compensation Creates a One-Time Adjustment
If your compensation policies are below market level (we’ll get
to that point later in this chapter), you’ll have trouble retaining
top employees because you’re not meeting their compensation
needs. If you adjust compensation upward to meet the market
level, you get a one-time effect on employee retention. But this
is where many organizations make the mistake of stopping their
retention efforts. In fact, stopping at this point usually makes
employee turnover worse in the long run, because of the “weed
garden” effect outlined in Chapter 1 (p. 10).

Compensation Must Be Part of the Retention Mix
Avoiding the “weed garden” effect involves placing the compen-
sation plan for your top performers in the context of an overall
retention strategy. You can do this in two ways:
1. Construct the compensation plan to connect with the
other elements of your retention strategy. For example,
you might design an incentive element to be paid on the
successful completion of the organization’s orientation
program (which you’ll design in Chapter 8) or on the sat-
isfactory conclusion of a mentoring or coaching relation-
ship (see Chapter 11).