Incentives don’t drive sales

 

The Daily Mail ran a feature about staff in financial services organisations being subjected to incentives. The pressure to sell to hapless customers who walk into a branch or ring their provider is relentless. It is causing damage to morale and stress amongst employees. Worse it is damaging relations with customers. In our financial services organisations we now have managers appointed solely to focus staff attention on up-selling and cross-selling. Managers believe their agents will make the difference. They are wrong.

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Recently we conducted analyses of what drives sales in two financial services organisations. We found that, in fact, incentives do not drive sales. To the extent that incentives have an impact on performance it is negative and marginal in terms of revenue and negative and significant in terms of morale and customer perceptions.

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Obsessed with their belief that they should focus on the people, managers miss the real opportunities to improve sales. So what does drive sales? I’d love to tell you, but its secrets like these that keep us in business I shall write about this is my next book – then everyone can find out at the same time. In the meantime we should reflect on the costs – both knowable and unknowable – of having all these managers working on the specification and management of incentive programmes. Some knowable costs: the management infrastructure, administration, prizes, lost revenue from customers whose debts are re-structured; some unknowable costs: intruding on customers and hence customer loyalty, staff morale.

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Service damages sales

 

I received a note from an overseas reader. He’s a systems thinker working in the car business. Apparently in his country car sales grew rapidly but the servicing infrastructure couldn’t cope. There were just not enough service agencies.

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Customers voted with their feet – car sales fell. So what did corporate office do? The sales team ran an incentive programmes to make more sales! The service team obliged all service agents to register to ISO 9000. Each agent now has a full time bureaucrat filling in the forms.

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I bet they have a slogan or mission statement about how customer orientated they are…

 

I wonder how long it will take them to wake up.

 

Lord Macdonald won’t talk to me

 

After receiving a reply from a civil servant to my first open letter to the minister for the Cabinet Office, I have received a civil servant’s reply to the second. This is the same man who stood up at the recent Excellence Conference in Glasgow and said he had read all the various ‘improvement’ models and found them all useful. Oh dear.

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He should be aware that ISO 9000 is based on bad theory, Charter Mark is a ‘specification and inspection’ regime, the EFQM includes command and control rather than systems thinking in its ‘areas to address MAY include’ and Best Value has bad measures and no method. But how could he know? All of these models are plausible when you read them, the problem is they don’t bake bread.

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Government ministers have been foisting irrelevant and counter-productive interventions on our public sector organisations. I don’t just offer the minister evidence-based and sound theoretical arguments about what is going wrong, I also can show how public services can be improved. So why won’t the minister talk to me?

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Well of course he is too busy to respond the thousands of letters he receives each day. No doubt the fact that our public services are still not improving despite the massive spending is way down on his agenda. So when someone pops up and offers a solution – something that works – he passes it off to a civil servant who is measured on promulgating the irrelevant and counter-productive interventions.

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The good news in the second reply is that the minister confirms that ‘WHAT MATTERS IS WHAT WORKS’. So the brigade of interferers can expect some strong challenges from those who are following the Vanguard methods.

 

Systems Thinking in the Public Sector – June 6th

 

It was Tony Blair (our Prime Minister) who originally said: ‘What matters is what works’. At this event you will see what has worked.

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Get results like these:

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Get your housing voids, repairs and adaptations down from weeks to days…
Rip out masses of waste in housing applications, street repairs, benefits payments…
Increase capacity in call handling in police response units and local authority services…
Improve customer service in arts and venues, community centre bookings…
And more…

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Get frameworks for improvement. You will take away practical, tried and tested frameworks for action. Every session has a ‘template’ or systems framework that you will take away. You will learn how it has been used, you will see how it improved performance and you will be able to apply the methods that others have already succeeded with.

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Systems Thinking in the Public Sector – June 6th, Creaton, Nr Northampton.

 

Scottish minister visits systems thinking in action

 

The minister responsible for public sector performance improvement in Scotland has visited one of our Scottish clients. He saw for himself how the applications of systems thinking have had an enormous impact on performance and morale. Hats off to North Lanarkshire for leading these changes. It is perilous to be the leaders of a change to a new way of working, it threatens the status quo and thus produces many challenges. For more information you can e-mail David Keachie at: KeachieD@northlan.gov.uk

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Not wanting to leave the others out… there are other local authorities getting similar results. Find out more at the June 6th event (see above).

 

Welsh government abandons Best Value

 

A contact in Wales tells me the Welsh Executive has abandoned Best Value as they feel it doesn’t work. Why is it you need to be at least three hundred miles from Westminster to be able to act sensibly?

 

What are we teaching our children?

 

My daughter tells me her school is currently being inspected. Teachers have announced that if the pupils experience a re-run of a lesson they had recently, they are to pretend it is fresh. The pupils have been told to put up their hands when a question is asked – the right hand if you know the answer, the left hand if you are not sure. In the last two weeks I have told this story to groups of managers I have been working with – they relate similar tales.

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Should we be pleased that at an early age our children are learning the business of ‘cheating’ in the face of our ever-growing specification and inspection based society? Or should we lament the impact this will have on the value they will place on learning? What is the purpose of our education system?

 

Signals from Noise

 

It is a rare event for me to recommend a software product, but this is one I wish we had invented. Regular readers will know how much I bang on about measures in call centres being used in the wrong way and how if they are used in a different way morale and performance improve (if this is news to you go to the articles section of the web site). Call centres are just one application of the product. ‘Signals from noise’ transforms the way measures are used in organisations. It is the only ‘dashboard’ I have seen that truly is ‘looking forward’ rather than backwards. The product will be demonstrated with some applications at our next Network Day on May 16th. For information about the Vanguard Network e-mail the office: office@vanguardconsult.co.uk