What I Learned During the Economic Slump

Monday, December 29th, 2003

In What I Learned During the Economic Slump, David Pottruck, co-CEO of Charles Schwab draws a distinction between sales and service:

We like to say at Schwab that the difference between sales and service is relevance. If a client perceives us as presenting a solution to a problem he doesn’t have, that is selling. That feels really bad, and it’s a huge waste of time. On the other hand, if the client sees us as presenting a solution to a problem he does have, that’s service. That’s not sales.

Pottruck also comments on incentives:

One of the mistakes I made was thinking that, if I changed our incentive systems in certain fundamental ways, I would change behavior. What I’ve come to understand is that people do things because of lots of different motivations. Incentive systems alone can’t do it.

People in sales jobs are very economically oriented and will typically respond enormously to changes in compensation. Many technologists, on the other hand, take pride in developing intellectual property, in working on the latest things. If you put such a person on technology maintenance, even if you pay him more, he won’t be happy.

Another thing I’ve learned in the past two or three years is that we constantly underestimate how powerful recognition is. People will respond tremendously to recognition — especially in times like these, when people are feeling so bad about so many things. Feeding people’s emotional souls is such an important thing. One of my guiding thoughts when I speak with employees, one on one or in large groups, is that they may forget exactly what you said, but they will remember how you made them feel.

Leave a Reply