When your sales staff is compensated based on deal size, not profit

Interesting if not obvious-in-hindsight complaint about Sun Microsystems by Oracle head:

More infuriating, says Ellison, is that Sun routinely sold equipment at a loss because it was more focused on boosting revenue than generating profits. The sales staff was compensated based on deal size, not profit. So the commission on a $1 million sale that generated $500,000 in profit was the same as one that cost the company $100,000, he said. “The sales force could care less if they sold things that lost money because the commission was the same in either case,” he said.

See Reuters article.

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