Abolishing all sales incentives, and the founder's return as president (2023)

How to redesign pay tied to performance

The heart of this response was that it went beyond the individual accounting of a resignation and reached into the structure that produced the wrongdoing. A system in which pay rises with contracts closed and add-ons sold is a force that pushes the sales floor forward, and, taken too far, a pressure that pushes it away from the customer's interest. Chairman Hirota Yasuharu made the painful choice of abolishing outright the very mechanism that had underpinned his company's growth. It is a judgment made by a founder who, precisely because he knows the shop floor, could see both the potency and the side effects of performance-linked pay.

The question that remains is how to preserve the power to sell on a floor from which performance linkage has been removed. Nextage's earnings structure — bundling attached services and earning on the lifetime value of the customer — was assembled on the assumption of an energetic sales force. How to hold that energy under pay centred on fixed salary, and how to design a floor on which selling does not damage the customer's interest. Reconciling the prevention of further wrongdoing with the continuation of the cross-selling model the company has run since its founding remains the next task for Hirota Yasuharu, returned to the presidency.