By Daniel Hunter
Christopher W. Cabrera, Founder and CEO, Xactly Corp. has issued an open letter to Martin Wheatley, chief of the Financial Conduct Authority. This comes in the wake of mis-selling scandals, which are likely to cost banks over £10 billion in compensation, and several high-profile figures being awarded large bonuses despite poor company performance.
With the FCA, FSA, and PIRC attempting to crack down on mis-selling and poorly designed incentive schemes, Xactly CEO, Christopher Cabrera, feels more needs to be done to address a system in which employees are rewarded ‘just for showing up’. In the open letter, Cabrera suggests important key areas which need to be considered regarding the development of any new legislation or regulation to ensure bonuses are used as a way to affect better employee behaviour.
Below is the letter in full.
Dear Martin Wheatley,
As you know, UK’s bonus culture is broken. With mis-selling set to cost the banks £10bn and several high-profile senior employees being awarded seven- or eight-figure bonuses despite poor company performance, it is clear something needs to change.
As such, I applaud the work of the FSA, FCA, and PIRC in attempting to crack down on mis-selling and poorly designed incentive schemes. As strong believers in the motivational power of compensation, Xactly recognises bonuses as an effective way to drive employee performance. However, too often it appears that they are being rewarded for just showing up to work. This is wrong and has to stop.
The unfortunate incident of UK banks mis-selling Payment Protection Insurance should force managers in other industries to reassess their current incentive techniques and examine the culture of their sales teams. At Xactly, we are fixated on bringing to light poor sales behaviours, and arming managers with the insight and techniques the need to address them. This requires activity, not words.
Naturally the introduction of any new legislation or regulation will be the target of much comment, in the spirit of advice. Here are three things you may want to consider:
Transparent Reporting — Ensure that the board and management team have a clear view on sales rep behaviour and the bonus process. Too often, managers turn a blind eye to poor sales techniques simply because reps are making quota. Regular, transparent reporting is essential in changing sales culture.
Correct and Timely Payments — When sales reps receive incorrect or late payments, it leads to a culture of mistrust. This leaves reps feeling demotivated and disinterested in overall customer satisfaction.
Bonuses Tied to Specific Metrics — Managers who underperform — financially and with regard to company ethics — should not be rewarded. Instead, bonuses should be linked to overall company profitability, brand value added, or customer experience.
I will be in the UK in the final week of June and would welcome the opportunity to talk about this face-to-face. In the meantime, I look forward to seeing the results of your investigation and hope your actions will result in a rapid and fundamental change to the UK bonus culture.
Christopher W. Cabrera
Founder and CEO, Xactly Corp.
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