IESEG professor João Vieira da Cunha explores the impacts of pressure on teams and their managers. Particularly in sales, he finds that pressure to meet goals can push teams and managers to misreport figures. In such cases, company strategy is then informed by misleading data, which has been calculated to impress rather than to inform.
Hitting targets, outselling competitors, even outperforming colleagues is all part of daily life in sales. A race to hit numbers is often encouraged by management, with employees and managers receiving bonuses for reaching sales goals. But how do such pressures impact reporting? How accurate are the sales figures that get reported? And are these sales truly driven purely by monetary incentives? According to Professor João Vieira da Cunha, the pressures on sales teams are in fact often counter-productive.
Skewing the data to feed the monster
“Teams complain about having to ‘feed the monster,” says Professor Cunha. The “monster” is Customer Relationship Management (CRM) software. Managers want to present an image of success to their superiors, so they pressure teams to “feed the monster” with high sales figures. Does this mean that teams and mana- gers report fake sales? Not exactly. “The sales reported are not fake sales,” Professor Cunha explains. “They are orders that have actually been placed but by customer volition, not as the result of a sales effort. By reporting them as sales made by the sales team, therefore, the team is portraying itself as more accomplished than it actually is.”
Complex Motivations to Explaining False information
“Interestingly, teams did not seem to make such false reports for extra money. They complained about having to produce the fake numbers as it took time and was unethical,” Professor Cunha reports. “For their part, meanwhile, team managers complain about the pressure they are under to meet demanding targets.” Even when the goal is reached, and you would assume that the pressure to “fluff the figures” would stop, instead the pressure often continues due to decisions to continually raise targets. “Collectively, senior managers, middle managers and employees can create deceitful data. No single person or group wanted to do this but together they felt they had no alternative,” Professor Cunha explains.
When biased data distorts strategic decision-making
A major negative consequence of reporting incorrect data is the adverse effect on com- pany strategy. During his 15-month study of a telecommunications sales unit, Professor Cunha collected information from teams, their direct managers, and senior management to find out how they were producing and using the sales performance data.
