Sales compensation: are we rewarding the signature or a deliverable commitment?
In high-value-added selling, securing agreement and preparing for delivery are connected but distinct tasks. The managerial question is specific: does compensation focused on signed revenue leave enough room to verify the commitments being made?
What the literature establishes
Bengt Holmström and Paul Milgrom (1991, Journal of Law, Economics, & Organization) develop a model in which incentives attached to one task change the effort devoted to others. When some contributions are easier to measure than others, strongly rewarding the former can divert attention from the latter. Applied to sales, this mechanism suggests examining not only the signature but also the less visible work of preparing for delivery.
The gap between what is requested and what is rewarded
Drawing on organisational examples, Steven Kerr (1975, Academy of Management Journal) analyses contradictions between the behaviours organisations hope for and those their reward systems encourage. Management may request close cooperation with operational teams while recognising only closed contracts. The problem is then not necessarily a lack of goodwill in sales: it may lie in the priorities the organisation actually makes rewarding.
The hasty conclusion
It would be tempting to conclude that commissions should be abolished or every preparatory step rewarded. These studies support neither rule as a general solution. Adding an indicator may simply redirect effort towards producing documentation without making commitments more deliverable. (our executive and employee training programmes)
What the evidence cannot settle
The first article is a theoretical analysis; the second offers an illustrated diagnosis, not an experiment with sales compensation systems. They therefore establish neither the optimal weight of a commission nor the expected effect of reform in a Swiss company. In practice, a poorly prepared account file may also reflect a lack of technical resources or unclear responsibilities rather than an incentive problem.
A practical check in Sion
Within SHR's « Vente à forte valeur ajoutée » programme, a proposed exercise in Sion would track all contracts signed during a predefined period and check whether their critical commitments had received dated operational approval before signature. Depending on the activity concerned — hydropower, healthcare, viticulture or Alpine tourism — this approval would address an identified constraint, such as a maintenance window, team availability or a seasonal deadline. The indicator would be the number of contracts containing this approval divided by the total number signed, verified against the files and considered alongside commitments renegotiated after signature. This record would not prove an effect of compensation, but it would provide an observable basis for discussing what the organisation rewards and what it leaves unmeasured. To go further: explore the High-Value Selling training in Sion in the canton of Valais, or browse our executive and employee training programmes in Switzerland.
In pictures: High-Value Selling in Sion
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