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Sales is a hit-driven business. If you close >50% of your potential deals you're on fire and are probably not getting enough quality leads. Almost every other

by otoburb 13y ago

Sales is a hit-driven business. If you close >50% of your potential deals you're on fire and are probably not getting enough quality leads. Almost every other part of the business (marketing, engineering, professional services, G&A) is expected to perform or deliver at near perfection (say, >90% for a sloppy organization). The only exception to the non-sales role that allows for a "low" success rate would be R&D. As others mentioned in the comments, bonuses are typically the way to reward non-sales staff upon completion of their portion of the work. As well, there are usually equity pools that staff participate in. A commissions incentive structure is incredibly stressful for employees who expect steady, dependable and predictable paychecks with bonuses on top. Commissions incentive structures often attract and encourage aggressive personalities and characteristics. It may work out if your developers were comprised almost entirely of freelancers, but even freelancers expect to get paid for almost every project they complete. Maybe if your developers were also authors or blog post writers in their previous lives then they'd understand and appreciate the commissions structure a bit more. Keep in mind, it makes little sense to give developers commission upon deal closure because, unless they directly assisted sales in closing the deal, you're essentially giving them money for no reason. Commission, if you're going to give it, should be handed out to developers after they do their part of the work successfully, in which case how is this different from a bonus?

bruce511 13y ago
It's also worth pointing out that sales and development have substantially different work cycles. A sales is a binary event, once it's done, it's done. Development on the other hand is (mostly) never complete. There's maintainence to do, features to tweak, bugs to fix and so on. Let's consider a bug report. Let's assume the client is not paying to get the bug fixed. Which developer then wants the job? Indeed since programmers are incentivized the same way as Sales, they need to "complete" lots of jobs quickly. The faster the better. Which leads to more corners being cut in the first place. Worse code, no-one interested in maintainence - these are not recipes for quality products. One of the bigger problems with commission based salesman is they they'll sell anything - limiting them to selling only what is already available takes strong management, and the occasional waving of a big stick. Our sales people work inside some tight constraints and are financially penalized when they oversell. This is a reaction to past sales people overselling, angering their commission, but for work which was ultimately unprofitable because they mis-sold the client the wrong product. Culturally sales people are used to a commission -programmers are not. Sales people sell a lot of things that are eh to sell, and avoid products that are worthwhile, but hard to sell. If programmers were the same way we'd end up with mountains of 99c apps that do nothing as programmed searched for the killer app that takes no risks, but is easy to sell. Oh wait... A single developer is ultimatlely paid on commission already - but he's also motivated by the health of the business as a whole. The employee working on commission enjoys none of the long-term upside of the business, yet shares in all the short term downside. He'll naturally want to work only on the "hits" and will quickly abandon projects if they're not an inmmediate success. We could also talk about co-operation (sales is notoriously insular, whereas programmers benefit from being sharing knowledge), the whole concept of "after sales service", and so on, but I think you've got the point. It's good to ask this sort of question- but in this case I don't see any benefit in paying them on commission, and I predict it would optimize developers in all the wrong sorts of ways, ultimately resulting in very bad code.
- czbond 13y ago
  This is a great point, especially the fact that sales are binary and development isn't.

by otoburb 13y ago

bruce511 13y ago

It's also worth pointing out that sales and development have substantially different work cycles. A sales is a binary event, once it's done, it's done. Development on the other hand is (mostly) never complete. There's maintainence to do, features to tweak, bugs to fix and so on. Let's consider a bug report. Let's assume the client is not paying to get the bug fixed. Which developer then wants the job? Indeed since programmers are incentivized the same way as Sales, they need to "complete" lots of jobs quickly. The faster the better. Which leads to more corners being cut in the first place. Worse code, no-one interested in maintainence - these are not recipes for quality products. One of the bigger problems with commission based salesman is they they'll sell anything - limiting them to selling only what is already available takes strong management, and the occasional waving of a big stick. Our sales people work inside some tight constraints and are financially penalized when they oversell. This is a reaction to past sales people overselling, angering their commission, but for work which was ultimately unprofitable because they mis-sold the client the wrong product. Culturally sales people are used to a commission -programmers are not. Sales people sell a lot of things that are eh to sell, and avoid products that are worthwhile, but hard to sell. If programmers were the same way we'd end up with mountains of 99c apps that do nothing as programmed searched for the killer app that takes no risks, but is easy to sell. Oh wait... A single developer is ultimatlely paid on commission already - but he's also motivated by the health of the business as a whole. The employee working on commission enjoys none of the long-term upside of the business, yet shares in all the short term downside. He'll naturally want to work only on the "hits" and will quickly abandon projects if they're not an inmmediate success. We could also talk about co-operation (sales is notoriously insular, whereas programmers benefit from being sharing knowledge), the whole concept of "after sales service", and so on, but I think you've got the point. It's good to ask this sort of question- but in this case I don't see any benefit in paying them on commission, and I predict it would optimize developers in all the wrong sorts of ways, ultimately resulting in very bad code.

czbond 13y ago
This is a great point, especially the fact that sales are binary and development isn't.