| What
if hotel sales people were paid on mission - actually compensated only for
what they produced? Pretty radical idea, isn't it? Almost every other industry
has a mission-based approach to compensating sales people based upon what is
actually produced.
The issue of sales and management
performance and accountability has largely been measured solely through group
bookings or market share penetration and yield indices. Group bookings are
measurable and attributable but market share and yield are not necessarily. How
much of market share and yield is driven by the franchise, location, etc. and
not through any direct activity on the part of sales?
Another approach to accountability has to
do with making a required number of sales calls. While it requires a certain
amount of activity to put enough business in the pipeline to generate revenue,
call activity alone is insufficient to justify sales staff retention. We all
know that lines on a form can be filled in on Friday afternoon from almost any
source including the names on the sides of trucks passing on the highway. While
we grapple with the issue, hotel revenues and profits are declining
precipitously, exacerbated but not wholly caused by the war in Iraq.
Tony D'Angelo, a hotel consultant whose
credentials include multiunit operations management and a VP of HR, devised a
radical approach to compensation for hotel sales people - mission-based
compensation. The pilot projects included John Q. Hammonds hotels that have
implemented the program in 32 of their properties. It was rolled out in January
2002 and for those hotels using it for twelve months REVPAR increased by 5%.
Stunning in an environment where negative REVPARs have be e the norm.
Tony asserts, "By linking the actual
results of these (sales) efforts to individual compensation, we hope to inspire
work behaviors among the sales force that significantly improves Sales
Department productivity." It is in the area of behaviors or skill sets that
Tony and I connected.
The training element is the T. in P.A.C.T.
where we identify and train for the behavioral skill sets required to turn
demand managers into demand generators whose performance can then be measured
and compensated accordingly.
What does P.A.C.T.
stand for?
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P.
- Performance.
How we
measure it in terms of production - revenue for which the sales person is
responsible. This forces the sales person to focus their activity on those
accounts that are actually producing or have the potential to produce. The sales
manager's 'personal revenue' depends upon it. |
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A.
- Accountability. There is
no greater accountability than to oneself in terms of being able to pay the
bills and retaining one's employment. That is where this system puts the
responsibility. I deal with some hotels that don't even require weekly reports
and those that do usually don't review them thoroughly. Sometimes management
does not know what to look for or the questions to ask. |
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C.
- mission-based compensation.
Lest
anyone think that the sales person only takes home what they have produced for
the month, there is a draw against mission based upon the previous salary
level and the assignment of existing accounts. New sales managers have their
draw based upon expectations of their productivity. Production over and above
this level is bonused on a monthly basis. Sweet reward for those who excel! |
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T.
-
Training. New sales
behaviors don't automatically manifest themselves with a change in the
compensation structure. Some people will automatically 'get it' but some, if not
most, will need to understand and acquire the skill sets required for the new
'accountability'. Sales people have a strong desire to succeed; they will need
some new 'tools' to maximize their revenue production. The training component
includes supplemental and cost-effective real time web casts for training
'bytes'. |
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