2 . Away from Sacred Dogmas

Is Your Company Sacrificing Itself at the Altar of Sacred Dogmas?

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By Jerilyn Edginton

William Edwards Deming (1900-1993) is widely acknowledged as the leading management thinker in the field of quality. He was a statistician and business consultant whose methods helped hasten Japan’s recovery after the Second World War and beyond.

His philosophy and method allowed individuals and organizations to plan and continually improve themselves, their relationships, processes, products and services.

When adopting the New Philosophy and moving toward becoming a Deming Organization, one of the most difficult things we will have to do is identify and question our sacred dogmas.

I am not talking about a sacred dogma in the context of religion (although they share similar characteristics), I mean the sacred dogmas that are so embedded in our organizations that they would be impossible to exorcize.

Confronting sacred dogmas can be the number one barrier to change for companies (and indeed for individuals as well).

Many companies will not get past this step because it can be uncomfortable or even painful, shake the foundation of your organization, and shatter people’s carefully constructed belief systems and identities.

I have seen a few videos of Dr. Deming’s 4-day sessions, and when people ask questions related to transforming their organizations, there is one sacred dogma in particular that rears its ugly head over and over again.

It is really kind of funny…every time I hear this, I think “not THAT again”, because in the grand scheme of things, it seems somewhat trivial. What is this sacred dogma? Salespeople must work on commission.

Now, I know one or two salespeople, including my husband. When I am brave enough to bring up this contentious topic, he looks at me like I have just suggested a deep betrayal.

Of course, sales people work on commission – try salaries and they would all quit. No self-respecting salesperson would EVER choose to work on a salary. It would take away their drive, their fire, their productivity, and their CASH. Businesses would flail and shareholders would suffer. It is all fire and brimstone, doom and gloom.

And so the commissions continue.

This is an example of a sacred dogma. Whereas people seem to be able to wrap their heads around the possibility of eliminating quotas, rankings, promotional incentives, contests and other common motivational techniques in sales organizations, commissions remain sacrosanct.

When something is so accepted that any alternative is unthinkable, you have got yourself a sacred dogma.

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After just over a year of studying with Dr. Deming and Dr. Baker, and eliminating many of the other supposed “sales motivators”, Jim McIngvale (Mattress Mack), CEO of Gallery Furniture, was still hemming and hawing over one thing – commissions.

Gallery Furniture was about as sales-oriented an organization as it gets – more than half of their employees were salespeople and they did “whatever it takes” to close a deal. When he mentioned it to Deming and Baker, their response was “just do it!”. And that’s how Gallery Furniture eliminated commissions and moved their salespeople onto salaries.

I am not going to go into exactly what happened at Gallery Furniture, because there is plenty of information on this particular case study. Suffice it to say, there was no fire and brimstone.

The organization did not descend into chaos. There was no reckoning. Some salespeople did decide to part ways with the company; however, most did not. In the end, eliminating commissions actually exorcised some pretty toxic (albeit rational) behavior, and the organization benefited all around.

They recognized they had a sacred dogma, questioned it, and in the end, took the leap to try something different.

Sales commissions are just one example of many sacred dogmas that are pervasive in business today. Others include:

  • Engineers and/or developers do not work well in groups.
  • Developers cannot test.
  • We are successful because of the way we have always done things.
  • People are inherently lazy.

If it is uncomfortable (or even impossible) for you to challenge any of the above statements (or anything or imperative in your workplace), your organization may be sacrificing itself at the altar of a sacred dogma.

The more uncomfortable it is, the more important it would be to openly question it by asking:

  • Can we absolutely know that it is true?
  • If so, how do we know that it is true?
  • What might be some of the effects of this dogma on the organization?
  • What would our organization look like if we did the opposite?
  • How could the dogma be creating a self-fulfilling prophecy?

Gallery Furniture is one of the most-successful independent furniture retailers in the US. It ranks as one of the nation’s top sellers in terms of sales per square foot with an annual revenue of $64.21 million USD in 2021.

Founded in 1981 with $5,000 in capital and three employees, it became well-known as a sales-driven organization with the highest-paid (by furniture industry standards) commissioned salespeople.

The emphasis from Day 1 was to make the sale by any method —as long as it was legal!

Back then –from the CEO’s own words…

Sales Quotas and Salesperson Anxiety

”…the heart and soul of our business was our employees, most especially our salespeople. They were commission-compensated because that was the way I thought we would get the best productivity out of them. But that system created winners and losers.

The salespeople working there had one mentality: “Everything other than sales is not my job.” There was a daily sales goal. If the goal was reached, the 1st-placed salesperson for the day received a $500 cash bonus, the 2nd-placed got $300, and the 3rd-placed got $200. The thinking was that people worked harder for a carrot –but all that changed were their faces.

“We had a weekly quota the salespeople had to meet ($7,000 a week in furniture sales and $400 a week in chemical add-on sales) to get their 10% commission ($700 to $1,000).

However, if they did not make the quota and perhaps only did $6,000 for the week (no matter for what reason —say, because their son was sick and they had to take off a couple of days or whatever) they became a loser and only made 5%, or $300 a week. This obviously created a lot of games-playing and a lot of anxiety.”

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Misguided focus

“Judging performance using arbitrary goals fostered a giant amount of fudging of the figures. Salespeople went to great lengths to cross that narrow line between being a winner or a loser. Some salespeople would work six or seven days a week to reach their quotas. The more tired they got, the harder it was for them to make the quota. It was a vicious circle.”

“…Our Delivery Department could expect to be overworked on Thursdays, the end of our pay period, when salespeople would force customers to take delivery of their furniture just so that their quota could be met. ‘To heck with what the customer wants. I have to meet my quota.’

On the other hand, if a salesperson already had his figure for the week, he would call off all the Thursday night deliveries he had, and postpone them till the Friday or Saturday to give him a good start to the next week. It did not matter that the customer did not like this. All that mattered was: ‘What is good for me as far as my income is concerned?’

If they had a short week where they had not made their quota, it was not at all unusual on Thursday night for salespeople to have as much as two or three thousand dollars worth of furniture delivered and stored in their garage so that they could say they got it on the week’s quota—to be delivered later to the customer at the salesperson’s convenience…”

“…On Thursday evenings it was not uncommon to see customers leaving with dumbfounded expressions on their faces, their arms full with 30 bottles of furniture polish—that was because of the add-on quota.

Customers were not allowed to buy what they wanted if it had little or no profit in it —that would mean very little commission. So they were ‘helped’ to like something else.

The focus was only making that quota: how much money can I make from this customer. They even prejudged customers before they walked in the door by the type of car they drove!…”

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Internal Conflict

“…The salespeople hated having new salespeople hired on the floor, because they felt like it would cut into their commission. They felt like if there were only 50 salespeople, they could sell more than if there were 60 or 70. And so they made it very difficult for the new salespeople to hang on; since they perceived them as a threat to their income, they would try intentionally to run them off the floor.

Another problem was that salespeople continually fought each other for the next customer that came in. Or, if somebody came in and asked for Don, I would say: “Don’s not here today—I’ll be pleased to help you,” even if Don was there…”

“We ranked all our salespeople at the end of every month from one to 100. I thought that was the way to do it. The top ten were superstars, the other 90 were losers. We almost went to the level of firing the bottom 10 every month to get rid of them. The system caused a lot of fear in the workplace.”

Salary vs Commission

“…Taking a leap of faith, we decided to do away with commissions and pay all salespeople a salary based on the income they made the previous year and on their years of service to the business, so that nobody would lose. And if the company profited then everyone would share equally in our profit-sharing plan.

Now, not only did managers have fears about going to salary: the salespeople did too.

Salespeople thought that they would not make as much money as before. Management thought that salespeople would be lazy, having no incentive to do their share. And salespeople feared they would still be evaluated, rated, ranked and appraised on the same old criteria and measurements.

Many people told me that Gallery Furniture was betting the company unnecessarily on an all-or-nothing situation. And I personally had a few fears not worth mentioning here. But we pushed all the chips in the middle.

And quite soon those initial fears were behind us. Almost immediately we made some amazing discoveries. People do not work less. They work more, and are eager to contribute and to prove their worth. They jump in and get involved, and display talents we did not know they had…”

Check agile-thoughts section Seriously? –ERSTWHILE YORE– to find out how the change happened and the bottom line.

I am Jerilyn Edginton and these are my agile-thoughts

2021 © Toronto, CANADA by Jerilyn Edginton

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I am passionate about all things software and applying the principles of Dr. W. Edwards Deming in the software industry.

I am especially interested in designing products that solve real-world problems, systems thinking, and creating work environments, processes and incentives that bring out the best in people.

When I am not working, you can find me paddling, underwater or in a hammock with my ukulele.

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