I read with interest recently that the Financial Consumer Agency of Canada has just started a business practices probe to review sales tactics after allegations that some bank staff chasing lofty sales goals have felt pressured into behaving unethically. Regulators are more alert to unethical behavior after the U.S.-based bank, Wells Fargo & Co., was fined $185 million over a scandal that revealed the lender had opened over 2 million unauthorized accounts.
The situation in Canada does not seem quite that bad, but anonymous staff at the Big Five banks have been reporting that sales targets are set so high -- with threats from middle management to deliver on the targets – that they are often breaking the rules. Employees have reported that they are upselling, tricking, and even telling lies to customers to meet unrealistic targets and keep their jobs. “Hit the targets with little regard for the customers” seems to be the mantra. Then when targets are being met by staff, the targets were simply raised the following week! Sounds like a treadmill that starts spinning so fast that you eventually have to fall off the end.
All of this started me thinking.
When you are in business it makes sense to want to sell more of whatever you are selling, whether that be banking products or donuts or widgets. If you can sell more you should deliver more profits – and the primary goal of any business should be to turn a profit. It is hard to do much in business if you are broke.
Setting targets -- yes or no?
When directors or owners or managers sit around and decide it is a good idea to set some targets, I started to wonder about the best way to meet those targets. Actually, go back one step. Should targets be set at all? Look up business quotes and you will see “you can’t hit a target that doesn’t exist” and “goals that are not written down are just wishes” and about a thousand other such examples. I want to break it down a little though. If I sit in my ivory tower (that all business owners sit in) and decide that our company has a new goal starting from today and that goal (or target) is for every sales team member to sell X widgets per day, will this one action of me setting a goal achieve anything? Will it make more people walk in the door or the phones start ringing or the sales start skyrocketing? It sounds great, but if it was that easy, Ford Motor Co. could be the No. 1 car manufacturer in the world just by Jim Hackett (the new Ford CEO) setting targets higher than other car manufacturers!
If only it was that simple – but a goal without a plan is just a wish. And that is where I come to a dead end with target setting by organizations. If I make a declaration in my business that we have a new sales target, then a reasonable response from my sales team would be to ask, what is the plan to meet that target? If the response is that your job is on the line or that wages or commission will be reduced if the sales target is not met, then I can see a problem developing – and developing very quickly. Cue the Canadian banks.
For the sake of the discussion, let us assume that the business owners and managers have had a discussion with the staff of the organization and decided on some realistic targets and put the tools in place to help meet those targets. That might involve some advertising and some new products and maybe even a new strategy.
Now we go back to my original thought. What is the best way to have your staff deliver on those targets?
‘Measure what you treasure’
It seems that the response from the Canadian banks is to respond with threats. “If you want to keep your job, you will sell X widgets each week” or “you will be paid commission only when you sell more than what you sold last week” or similar. Now the great part about humans is that they are adaptable. Put up an unreasonable situation with a silly demand and humans will find a way to deliver to the specifics of what you demand rather than deliver the best outcomes for your business. One of my favorite quotes is to measure what you treasure, and if you set targets for certain sales and add in a threat for good measure, your sales staff will find a way to deliver what you asked for and not what you necessarily need.
Go back to the Canadian banks again. One staff member said that they had unrealistic targets around new Visa accounts. To meet their targets, they were closing MasterCard accounts and opening Visa accounts. Net result for the bank was zero. There was no additional profit for the bank in a Visa account over a MasterCard account, but the staff member was achieving the target. Furthermore, the short-term targets are probably not delivering long-term customers for the bank. When the customer finds out they have been sold a product they didn’t ask for and didn’t want, they change banks and tell all of their friends about the experience. Meanwhile, the staff member is being patted on the back for meeting targets.
I firmly believe that setting unrealistic targets and adding a threat for good measure will deliver the same result that is often discussed with a boss that yells at his staff. Both behaviors will result in short-term good results while sacrificing long-term beneficial outcomes.
I have pointed out lots of negatives, but that leaves a burning question. How can you motivate staff to deliver the outcomes that your business needs? That is a tough question to answer as there is no one simple method to deliver that – and I don’t have enough words left in this article to fully explore it. But read my next article to hear my thoughts on that aspect. For now, be certain of one thing. Threats and a short-term spike in sales is not going to deliver long-term sales to your business. Just ask the customers and shareholders of the Big Five banks in Canada.