Living by Numbers in SPM

An article in the July 2009 issue of Wired magazine describes the growing popularity of a running training aid system from Nike. The system, called Nike+ (wiki page here) consists of an electronic sensor that attaches to a runner’s shoe; the sensor feeds data to a storage device, the Nike SportBand, or an Apple iPod fit with a small receiver. The system records running duration, pace, and distance data which can then be uploaded to a website allowing for goal setting, tracking, and comparison with other users of the device. Since the introduction of the product in 2006 1.2 million runners have collectively logged more than 130 million miles.

Friendly competition and challenges such as fastest 5 miler or first to 50 miles this month type contests amongst groups of users has proliferated. What is behind the device’s popularity? The article cites a famous study performed at Western Electric’s Hawthorne manufacturing plant in Illinois in 1920. Management, trying to discover the most favorable work environment, changed various working conditions (length of breaks, lighting, etc.) measuring performance after each change. After an initial improvement in work performance with the first change, the new higher performance continued with each subsequent change including surprisingly a change back to the original conditions. What Hawthorne managers had discovered is that the motivating factor driving the performance increase was that the workers knew their performance data was being measured and recorded. The effect is now known in Sociology as the Hawthorne effect. Nike is capitalizing on this effect which seems to have a particularly strong influence on athletes and fitness buffs.

I can personally attest to the motivating effect of competition and knowing that I am or will be measured.

Every year in September a group of my former competitive swimming team mates from high school and college meet out in the San Diego area for the La Jolla Rough Water Swim race. It’s also an excuse to get together and catch up but we enjoy the friendly competition within the group and against the field at large. Knowing that I will be racing in September and the trash talking rights that go to our group’s winner, motivates me to workout and prepare beyond the level of motivation that I otherwise get from simply realizing the health related benefits of swimming.

So what does all of this have to do with your sales performance management system?

A SPM system can provide motivational effects beyond the commission payments that it is calculating by encouraging easy tracking of performance and competition amongst reps and against prior performance. I believe those that work in sales are very similar to athletes in this regard – they welcome and are motivated by the tracking, measurement, and competition aspect of their job. How can you and your SPM system support this motivational effect? The system must allow for easy access to frequently updated, accurate performance data. Privacy concerns? Obviously there may be issues with sharing of sensitive compensation payout data and in some circumstances this would prevent sharing and comparing individual raw performance data. However, where this is a concern, sharing of aggregate data to provide feedback to reps on their relative performance against the field can be an option.

If you work in the SPM industry, I encourage you to check out the article and the July issue of Wired in general; the issue’s theme is Living By Numbers which could be a theme of the SPM industry as well. Commission payments need not be the only way your SPM system drives performance. With easy access to high quality data, your SPM system can encourage the innate competitive nature of your sales personnel.