Compensation Is A Poor Substitute For Leadership

Summary

CEOs often default to compensation changes—bonuses, commissions, SPIFFs—to drive sales, but pay alone won’t create the consultative, value-focused selling organisations need. The article argues that strategy, frontline coaching and strong leadership matter far more than incentive tinkering. It highlights three common misuses of compensation (profit-shifts without coaching, metrics replacing strategy, and product-focused SPIFFs) and shows how each undermines long-term customer value and margin protection.

Key Points

Compensation is necessary but insufficient: top sales teams are motivated by purpose and customer value, not just pay.
Switching from revenue- to profit-based pay doesn’t stop discounting unless reps are coached to sell on value and engage higher-level decision makers.
Using compensation metrics as a substitute for strategy invites Goodhart’s Law: measures become targets and distort behaviour.
SPIFFs often produce transactional selling and misaligned customer recommendations, damaging trust and long-term retention.
The CEO’s real lever is leadership: define the right customer profile, align sales leaders to that strategy, and coach front-line teams to execute on it every call.

Content Summary

The author begins by noting why compensation dominates sales conversations: it’s a large, manageable budget item and there’s a persistent (but outdated) belief that salespeople are primarily money-driven. He accepts that pay matters, but warns against over-reliance.

Three concrete problems are explored. First, profit-based comp aimed at reducing discounting often fails because reps haven’t been taught how to create value earlier in the sales process. Second, when executives let compensation metrics stand in for a coherent go-to-market strategy, sellers optimise for incentives rather than for fit or long-term value—resulting in poor-quality wins. Third, SPIFFs that spotlight products can push reps to sell what pays best rather than what solves the customer’s problem, harming relationships and lifetime value.

The prescription is straightforward: CEOs should prioritise a clear strategy, ensure sales leadership communicates and reinforces it, and invest in front-line coaching so reps can sell on value. With that foundation, compensation can support desired behaviours rather than trying to manufacture them.

Context and Relevance

This is timely for organisations facing margin pressure, private-equity mandates or rapid product launches. As companies try to protect EBITDA and avoid poor-fit business, the piece reminds leaders that reworking pay schemes without equal attention to strategy and capability development is unlikely to deliver sustained results. It connects to wider trends favouring customer-centric selling, strategic account development and investment in sales coaching.

Why should I read this?

Short version: if you think throwing more money or short-term incentives at your salesforce will fix margin or growth problems, you’re kidding yourself. Read it to stop wasting comp budget and start fixing the leadership and coaching gaps that actually move the needle.

Author style

Punchy: This is a wake-up call for CEOs and sales leaders. The piece doesn’t bury the lede—leadership, not pay schemes, is the deciding factor. If you care about sustainable growth and margins, the examples and prescription are worth your time.

Source

Source: https://chiefexecutive.net/compensation-is-a-poor-substitute-for-leadership/

Author

Scott K. Edinger — consultant, adviser and author focused on leadership, strategy and sales.