The Power of Recognition: Would you Pay $30,000 for a Little Gold Star on your Business Card?
September 4, 2018
Ok, so this is a ridiculous title for a blog post. And I know what you’re thinking—it’s even more ridiculous that someone would be willing to give up $30,000 in compensation for some recognition and reward from their company.
Yet this seeming madness can be explained by delving into some deeply-rooted human behaviors as posited by Maslow’s Hierarchy, Deci & Ryan’s Self-Determination Theory, and Lawrence & Nohria’s Four Drive Model of Motivation. Humans are just hard-wired to pursue status, recognition, and admiration. For good or bad, these drives exert a powerful pull upon all of us. But when used ethically in business, they can result in some amazing outcomes and awesome levels of production.
So check this out…
A 2012 article by Ian Larkin, Assistant Professor of Strategy at UCLA’s School of Management, found that top-performing salespeople at a software company opted for essentially the scenario in this post’s ludicrous title. A report by the Incentive Research Foundation sets the table and summarizes the findings this way:
A large software vendor employs hundreds of salespeople compensated mostly through commissions. Standard commissions are 2% of sales, but they accelerate toward the end of the quarter based on accumulated sales. A salesperson who combines several sales into one quarter stands to earn commissions up to 20 times more than base commission.
Each year, the firm recognizes the top 10% of salespeople by including them in its “Sales Club.” Members of the club get a long weekend in Hawaii or the Bahamas (worth about $2,000), a gold star on their business card, and, presumably, the admiration and/or respect of their peers. It is important to note that membership in the Sales Club does not predict greater future sales nor any tangible career benefits, such as a higher promotion rate.
At the end of the third quarter each year, the firm announces the current rankings, letting sales people see how likely they are to end up in the top 10%. This typically leaves several dozen of the hundreds of salespeople in the firm on the cusp. If they close enough deals in the fourth quarter, they’ll get into the Sales Club. Within this group, about half each year also have big repeat contracts almost certain to close in the first quarter of the following year. If they push fourth quarter sales into the first quarter of the next year, they’ll trigger large accelerators and earn a lot more in commissions. This ”conflicted group” is the focus of the research.