Tag Archives: focus

Competition and Manipulation

“So, you’re the culprit,” I repeated. “What specifically did you do that was so counterproductive?”

“I remember, it wasn’t anything extreme. We have different sales channels and different product lines, with outside sales, inside sales, internet sales. I began to hand out bonuses for each department with the highest gross margin, another for the highest revenue in the quarter.

“It’s funny, now that I think about it, when I handed out those bonuses, the room was quiet. There was no jubilation or high-fives, just a nod and a polite thank you.”

“Tell me about the down-side?” I asked.

“I found out later,” Reggie explained, “that each department gamed the gross margins. They would pump up the pricing in the last week of the quarter and then rebate it back to the customer in the next quarter. In the end, we still got our standard margin, but each department manipulated the bonus system. And all the progress we made on cross-selling was lost.

“And it’s not so much that they had to pay the piper in the next quarter, but look at all the wasted energy, counterproductive to what we stand for. And the last thing on our mind was doing a good job for the customer.”

Problem Fixed, System Broken

“You have two out of five manager positions in place on a daily basis, so when you have a problem, you fix the problem, but not the system,” I offered.

“So, the problem is fixed,” Derrick insisted.

“Yes, the problem is fixed, but the system is still broken. You are missing three of five Managers, so you are not paying proper attention to your systems.

“You see, Derrick, when you have a problem, everyone scrambles to fix the problem. Even experienced Managers put on their superhero cape and leap in front of their biggest customer to save the day.

“What your managers need to focus on,” I continued, “is the system. Why didn’t the system prevent that problem? Or at least mitigate the damage from the problem? Their role is to fix the system.”