Drive: The Surprising Truth About What Motivates Us

by Daniel H. Pink

Okay,” you might be saying, “I understand the three compensation principles you just set out. But surely they don’t apply to salespeople. Aren’t they different from you and me?” My answer: Talk to Neil Davidson. In 1999, Davidson and Simon Galbraith founded Red Gate Software, a firm based in Cambridge, England, that makes development tools for programmers. Like almost all companies, Red Gate has a sales force. But unlike most companies, Red Gate has committed an act of managerial heresy: it has eliminated commissions for its salespeople. If salespeople are indeed different from you and me—if they are, as many claim, “coin-operated”—this is an act of commercial self-sabotage. Commissions are the fuel of sales. Without them, motivation stalls. Or does it? In the early days of the company, Davidson created a fairly straightforward commission scheme. But, of course, salespeople figured out a way to game it—by pushing sales into the time period most advantageous for them, by underselling one month to show a bigger gain the following month, and so on. This wasn’t because they were unethical; it was because they were rational humans responding logically to a particular incentive structure.