Henry Juszkiewicz | Crain's Philadelphia

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Henry Juszkiewicz

Background:  

Gibson Brands Inc. is an iconic American manufacturer of guitars and other instruments. Based in Nashville, the company's other brands include Wurlitzer, Epiphone, Dobro and Philips.

The Mistake:

In the late ‘80s early ‘90s I was very focused on improving our sales force. At that time, the business was very focused on local neighborhood retailers. They were all independent, owner-operated stores. I was convinced that salespeople were essential to success and growth.

We were paying almost twice the going rate and I did get some very high-caliber salespeople. But, for all the money that was being spent on the high-caliber salespeople and incentives, I wasn't really getting dramatically better results.

I played with various compensation schemes and completed sensitivity analysis. I was trying everything to see what clicked and what would motivate. I just couldn’t find anything that moved the needle.

So, I finally said, "I was wrong. Great salesmen do not make a difference in this business."

I ultimately reversed course and I brought the wages into line, which was a pretty steep reduction. I eliminated incentives and I reduced the number of sales guys, in a very dramatic fashion. So, what happened? Sales grew.

Personal achievement trumps money.

The Lesson:

The situation showed me that compensation isn't what matters. Everybody wants to get paid more – no doubt – but what people really want to do is win. Personal achievement trumps money.

What really mattered was the challenge that we had in the marketplace. Allowing people to contribute and be a part of that was much more important than great monetary incentives. I was able to attract better people and get much better results.

You have to be open to what happens and if you make a mistake, you have to learn from it. In fact, you should be making mistakes because it drives you in the right direction. It took years to really play out and I was constantly testing everything. Generally, I have found that common wisdom is wrong eight out of 10 times.

Most sales people are really quite good. The issues that they face and what impacts their success is more about the tools we give them. It isn't a question of their ability to sell and build relationships, it's all about the company. A salesman can't push a company to success.

At the end of the day, we are a consumer company and we have to deliver what the consumer wants. That is what drives everything else. If we meet the consumer need, we are going to win and then we can think about distribution and sales.

 

Follow Gibson Brands on Twitter @gibsonguitar.

Photo courtesy of Gibson Brands Inc. 

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