Sunday, December 2, 2007

Poor Sales Results, Fried Chicken and Taxes!

You might find this title a little fragmented, but I assure you it is justified, please read on…

This week, I was moaning to a colleague about how difficult it is to find talented sales people who really love prospecting for new business. In my time I have interviewed literally hundreds of sales personnel, and when asked if they like cold calling, very few say ‘yes’. At best they might answer that ‘it is an important part of their work’. But I am lucky enough to know someone who actually enjoys cold calling and prospecting (as long as he likes the product or service he is selling). So I am even luckier to be able to have him come and work for one of my companies.

However, my colleague said that he had never met such a person and that in his experience sales people were simply greedy and lazy, only bothering to follow up the sales leads that had been fed to them for products where they could make substantial commission with the absolute minimum of effort. Of course, this is logical from the sales person’s perspective. But if you are a pioneering company, trying to break into new markets, then these kind of sales people should have no place in your organization.

But I can hear you thinking, where does the fried chicken come into the story? Well my colleague worked for a company here in Belgium where the sales team was known to be particularly lazy and the Sales Managers seemed to let them get away with it. He said that all the sales team did was to go up onto the roof of their office and catch the fried chickens flying past them. And if there were no fried chickens flying past, then sorry enough, there was no sales, nothing more could be done and no more effort was needed! When I heard this story I thought, has my normally reliable colleague completely lost his head? Has he been smoking substances that make you see life from a very different angle? The answer was in fact quite mundane: in fact in Belgium there is an expression ‘gebraden kippen in de mond vliegen’ or, in English ‘fried chickens fly directly into your mouth!’, I guess what this means is that if you want to win something, you have to go out and work for it and not to expect a fried chicken to fly directly into your mouth?

Now to the Taxes link: I have been recruiting a marketing assistant this week, and I have been working with my accountants and legal advisors to see if I can find a salary construction that is both good for her (working via incentives) and for my company. Here in Belgium if you pay someone 100Euro, you actually have to pay the state 162Euro and the poor employee gets approximately 50-55. But they also need to be paid 13.92 times per year (they get extra money in the summer and an extra months pay at the end of the year)!

The problem is, if you pay any kind of bonus, it is so heavily taxed, that it is almost not worth receiving. So back to our sales people: If they have to do something they hate (cold calling) and then have to go out and sell a product that needs lots of explaining and convincing, then there is very little financial motivation, if at the end of the sales cycle the government taxes them so much that they only receive about 20% of what their employer actually paid out!

It really is a wonder that so many Belgian’s are employed at all, because once they receive the pittance left over (which they call their Netto salary), when they actually try and spend it, the government takes another 21% from them in VAT!

Today, Belgium still has no government, and I have to say I think these last months without one seem to have gone quite well (it makes me wonder, if one is needed at all?). However, when we finally do get a new Government it would be great if it concentrated on trying to get employee and employer taxation to a level of acceptability, instead of constantly arguing among themselves about which language should be dominant and where!

I was not a fan of Margaret Thatcher, but she did at least free up the British economy by taking away the appalling level of taxation that her previous governments had been piling on employers and employees alike.

Entrepreneurship needs to be matched by creative tax incentive schemes, if our staff have done well, please let us pay them the bonus that they deserve and then let them actually receive it, without bleeding company profitability to death.

So there you have it: Poor Sales Results, Fried Chicken and Taxes!

4 comments:

Chaos Theory said...

Excellent post!

It's nice to read how our Belgian system is perceived by foreigners (ok you're not really but, the comparison is worth reading it).

So, Jesus Christ (I'm no a beliver or any kind of evangelist, it's just an expression, me saying this just shows how much I'm pissed off), what is the fundamental problem of Belgian politicians towards economy?

We even seem to share part of it with our southern French neighbourghs.
Even the most Liberal party seems quite collectivist in our countries. Wealth MUST be shared by everyone.

Wealth and success are a sin... and our government are there to help us get some part of heaven!

A friend of mine, entrepreneur, wanted to hire a secretary part time.
Do you know how much she was asking to leave the unemployment system?
1.500€... for 2.5 days a week!
Meaning he had to spend 2.818€ to employ a part time... with nearly no qualification.

Her explanation is worth reading it, and I MUST agree with her, she's right!
The unemployement paid her 900€...
But she had 2 kids... meaning that if she started working, one had to be brought to a Nanny (450€/month.
She had to wake up everyday.
She had to pay her transportation (40€/month)
She had less time to care for the household.
She was loosing the indexed childre money (allocations familiales)...

Working would make her loose money!!!

Another example on how work is valued in my country...
If you're an entrepreneur and launch you own company, you become an "independant".
An "independant" is someone that is ready to risk his money, his time and family life to launch his own business with the risk of loosing nearly everything if he fails.
In my country, if you fail, you don't get a second chance... the State will be there to forbid you to launch another business, retry something etc... If he can, he will crush you to death.

Is it usefull to explain that the Income Tax department mainly focuses on the Independants?
Independants is a synomyn for the Income Tax Department of "cheaters", "robber", "criminal". This is purely the truth, this is how we are, as entrepreneur, felt by our government.

Is it also usefull to explain you (if you want to, I can forward you the link to the legislation in cause) that someone that as been UNEMPLOYED ALL LIFE LONG will get a high Legal RETIREMENT PAY than the Independant who has worked all life long, week end included, and paid lot of taxes?

Did you know that Belgium is the country in world where work is the most expensive? Not because of the salary of the people but because of all taxes on the salary; Belgium is THE country in the world where the difference between "net salary" (what the worker gets in the pocket) and the "gross salary" (what is paid by the employer) is the highest?
Where does the difference go? Honestly, I must say the government.
But my honesty obliges me to explain that I do not know how it is used and how it is possible that my country has one of the hugest debt in the world!

This is how work, entrepreneurship is valorized in my country...
And then... I hear cries and tears that our economy does not grow... It's already a miracle that it hasn't completely collapsed.

Harley Lovegrove said...

Although I can not endorse Chaos Theory's style and language, it is interesting to see how passionate he (or she) is about the Belgian taxation system.

I am not sure if his/her sentiments are shared by others and I do not want this blog to set out just to knock the political system of Belgium, there is more to my story than that.

I would like to point out that here in Belgium it is not all bad. In the UK self employed people get almost no pension at all, like in Belgium and for me that's fine. If we opt out of the employee pension system then we must look after ourselves privately.

I do not see a lnk between being self employed or unemployed. For some being unemployed might be a life choice but for many it is an unfortunate reality.

Wealth creation begins with personal incentives and for me it is low personal and business taxation.

Chaos Theory said...

The link is quite easy I think.
How can you push people to work, create wealth, be motivated while you see that:
-the system pushes you to stay unemployed, working would not mean have a better life
-the system does not push you to start your own activity.
- wealth is nearly condamned...

Ok, It's a bit a caricature but we are not far from truth. How would you motivate people? By retaining their salary? No, of course, bt it is how the system works here.

Honestly Harley, I don't care not having a pension and financing it by myself, provided then that the government lowers the fiscal pressure on opur shoulders and even on companies. I'm not motivated at the moment to hire someone because i see the cost... I also see that in order to provide an employee a correct pay, i have to pay twice the government.
How would you motivate to create employment?

Of course, there is more than just a critic of the belgian system in your post.
But... if you understand how minds have been formatted by such a system, you can probably understand that number of people here are just waiting the fried chicken come in their mouth. Because it is how the system has formatted their mind.

That's also why it in not strange to see that we are one of the country with the highest proportion of functionairs...
Those are just facts, no feelings.

Matthijs said...

I fully agree with the conclusion that entrepreneurship in Belgium is more frustrated than supported by the Belgian taxes. However, they are a fact. A lot of people have chosen to stay and to work in Belgium and by doing so have accepted the Belgian tax situation. Be aware, I am writing acceptation and not justification. In addition, I have experienced that Belgian sales people do feel rewarded by a bonus, despite the fact that the government will tax away most of it.

More important to them is how the bonus is determined. Managers should establish at the beginning of the year well defined team and individual targets, which are accepted by them. In setting these targets, it’s important for the manager to realise that one gets the behaviour, which one rewards. So, if he or she wants them to do cold calling and prospecting than he or she should set cold calling and prospecting targets, evaluate them as objective as possible and reward them accordingly. In addition, set the targets that ambitious that they can not afford to wait for fried chickens.

In addition, a bonus is only a financial external motivator. Although, I know that sales people are mainly driven by it, they do experience intrinsic motivation as well. In fact, winning sales teams are led by managers who know the power of intrinsic rewards, like recognizing a sales person for doing an excellent job in front of his or her peers, facilitating to them development opportunities and creating an open and feedback oriented sales team culture.

All in all, I am convinced that the sales managers’ behaviour and the sales target, evaluation and reward system are more important than the tax situation for successful sales results.