On April 27, Hewlett Packard Enterprise held an all-hands meeting for the thousands of people in its North American salesforce and apologised to them.
The company’s internal software, which tracks how much each person has sold and their sales commissions that form the bulk of their pay, was still not working properly, a top HPE exec confessed matter-of-factly.
“As you know, sales compensation has faced some challenges with data that’s being recorded in MyComp,” HPE exec Cheryl Brown, vice president & COO of Americas Enterprise Group, told the group on the phone, according to a recording of the meeting that Business Insider listened to. “Upstream data flows slower than expected and/or links between orders and customer account names were disconnected.”
For HPE’s salespeople, the failure of the internal IT system, called MyComp, means that their employer has no idea about their actual sales performance. That has caused serious inconvenience and stress for employees, many of whom have had to borrow money from HPE to make ends meet. Many valuable salespeople have gotten so fed up that they have left the company, multiple people we talked to about the situation told us.
It’s also an embarrassing situation for HPE, a $US31 billion company whose business is built on selling and installing complex tech products for other companies. And it couldn’t come at a worse time, as HPE steps up efforts to shape its newly-independent identity and tell its story to prospective customers and employees.
HPE’s Brown informed the sales team that the IT department had already fixed a lot of the issues and told them they would all be given the option to borrow against their anticipated commissions through June, saying. “We know this has been a source of frustration for many of you, and we apologise for that.”
While HPE knows how much total product it has been selling overall, the information it’s been sharing with salespeople on their individual performance is unreliable, the company said.
An HPE spokesperson admits to us that the company has had chronic problems accurately informing salespeople about their compensation for a second year in a row, ever since Hewlett Packard spun off HPE as its own separate company.
The company insists, however, that it has been paying its people accurately, it’s just the reporting part that hasn’t been right. The spokesperson said:
“Our sales people have been paid accurately and on-time and it would be wholly inaccurate to suggest otherwise. While our recent separation activities have contributed to challenges with the systems used by our salesforce to have visibility into their compensation, these issues have no impact on their actual compensation. As a result of the challenges we have given impacted salespeople a choice between remaining on our draw program, or moving to incentive compensation until all of these issues have been addressed.”
Working hard and in debt to the company
To decode HPs message a little: Even though HPE says that everyone’s paychecks are accurate, HPE decided to offer its entire North American sales team an option to continue to take a “draw” through the months of May and June. The draw began in its first quarter, in November.
A draw is when salespeople borrow against their future earnings. It’s a common practice for companies who employ people who earn commission, particularly at the beginning of a fiscal year when deals haven’t closed. It lets salespeople earn a steady paycheck while waiting on commissions.
But it’s also dangerous. If the salesperson doesn’t ultimately sell enough in commissions to repay the draw, the person ends up owing the company money.
Some people who are being told they owe HP money when they feel they don’t are calling it quits at the company, one salesperson told us.
“Some people have left. One guy in my region, they said he owed $US50,000. When he quit he told them, ‘I don’t know what to tell you, I don’t have your 50,000,'” this person said.
The salespeople we talked to didn’t feel confident that their compensation was being tallied correctly.
“There are deals from other reps that were returned or rejects that are placed on my account and deals that I did close are on other people’s accounts. There are people that will go even further into liability due to improper reporting,” one person told us. “I have fulfilled 30%+ of my quota yet I show -5% obtainment.”
The cobbler’s children
The issue HPE is apparently having, according to one salesperson we talked to, is tracking sales through distributors. Salespeople work with customers in their territories to make a sale but when the customer orders the product, it is sold through a distributor.
Distributors are the companies that warehouse products and deal with shipping and delivery. There are also times when a salesperson works with a partner, a smaller reseller who would order the product from the distributor and then install it. Keeping track of which salesperson gets credit for the sale is the problem, multiple salespeople told us.
Pretty much all big companies that sell computer hardware and work with partners do so through distributors. But others don’t have problems tracking this kind of data on a company-wide scale, salespeople tell us.
The irony is that HPE is in the business of designing and installing large complex IT systems. HPE calls it “digital transformation.” So this situation is little like the cobbler’s children, who, according to the proverb, never have shoes.
It’s been especially frustrating for the salespeople who work for Aruba, the wireless networking company HP acquired in May 2105 for $US2.7 billion, some of those salespeople tell us.
Several Aruba salespeople we talked to said their compensation tracking system worked fine until HPE migrated them to MyComp. By the end of this month, many people’s options at Aruba will be fully vested and one person predicts a lot of salespeople will quit.
Déja vu all over again
While this may just sound like an oddball glitch in one of HPE’s internal IT systems, it’s been going on pretty much since Hewlett Packard Enterprise has existed as its own company.
We first reported on these issues last July.
As we previously reported, back in 2016, a group of sales managers met with CEO Meg Whitman and lambasted her about the situation, telling her that thousands of people had not been properly paid for months. People told us last year that HPE had miscalculated some people’s pay by $US40,000 to $US50,000, because the software it used for tracking their compensation worked so poorly.
We heard stories back then of salespeople who couldn’t make their mortgages and were facing foreclosure or falling behind in their alimony payments.
The situation got so bad by the middle of last year that an expletive-laced email highlighting the problems made waves inside and outside HPE. The email, which was supposedly written by a top HPE salesperson but later turned out to be “spoofed” by someone else, was sent to the top sales brass as well as to Whitman herself and to a bunch of the company’s distributors outside the company, Business Insider confirmed with several people.
In any case, whoever sent it used a lot of salty language to express discontent with the compensation problem. Several people told us the email was shared all over the industry.
As we previously reported, after that meeting last year, Whitman jumped on the situation, ordered that her top sales lieutenant to send out an apology email and fix the comp problem pronto.
We understand that about seven months into that fiscal year, the problem did appeared to be fixed. And that’s why, when it cropped back up this fiscal year, and has dragged on again for seven months, salespeople became doubly upset.
The ones that haven’t quit are frustrated, but remain faithful that the company will get its act together and are betting their livelihoods on it. “I have personally accessed the home equity line against my house. I think it will eventually shake out. This happened last year and took 6 to 7 months.”