Are sales quotas effective?

Many industries, including financial services, employ sales quotas. But do they work? Not according to Denis Morin, a professor in the Organization and Human Resources Department at the UQAM School of Management. Our sister publication, Conseiller.ca, asked him why.

Conseiller: Are sales quotas good tools to boost advisor performance?

Denis Morin: Financial incentives to promote performance are counterproductive. Sales quotas necessarily undermine service quality. Advisors set their sights on the target, because it’s profitable, and forget the rest.

C: Do we need to go so far as to ban these quotas?

DM: They are suitable motivators for simple tasks like counting and cleaning bottles, but they shouldn’t be used for the complex activities of financial advisors.

C: Then why do financial institutions use sales quotas to drive their advisors’ performance?

DM: Past research has shown that performance bonuses increased productivity. But more recent scientific studies qualify these results. Money can motivate, but not consistently. We now know that performance bonuses decrease enjoyment at work, lead to burnout and diminish service quality.

Conseiller.ca investigated the pressure Quebec advisors are under to move products, and how that affects their client relationships. Read the full article (in French) here.

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