Where Purpose Meets Profit - Microchip Technology Round Table

Did you miss the Vistex Virtual Summit for the High Tech Industry on May 13th? Here’s a summary of what went down during our round table discussion with Mitch Little, Senior Vice President, Worldwide Client Engagement at Microchip Technology, Inc. Mitch is also author of the acclaimed book, Shiftability: Creating a Sustainable Competitive Advantage in Selling.

Microchip Technology went public in 1993 in what Fortune magazine cited as the best performing IPO of the year. Since then, they have notched up 122 consecutive quarters of profitability. Let that sink in… almost 30 years of economic cycles, recessions—and a historic pandemic—and the company has never experienced a quarter in the red. Mitch attributes this to Microchip’s goal of always trying to do the right thing for the people of the company. When you do that, he says, the net outcome is profitability.

Maintaining profitability, no matter what the circumstances, is how Microchip does the right thing by its people. The company found a multitude of creative ways to maintain profit in the down times (including joint sacrifices as teams) to avoid lay-offs.

The poison of commission

The company isn’t afraid to buck tradition. Early on, executives realized that commissioned salespeople were motivated to do what was best for their wallet, rather than what was best for Microchip or its customers. For example, salespeople made decisions to call on clients that would ship into their region so they would get commission directly on what they were doing. This incentive system simply did not work. Microchip executives determined that if you want employees to truly engage, you need to take away the back-pocket manipulation that directs them to do the wrong thing for the company as a whole.

The road less travelled

Microchip decided to go another way—eliminating sales commissions. In fact, they don’t have a salesforce; they have a client engagement team.

In the B2B world, sales force turnover averages more than 35%. In large high-tech companies such as network or CRM providers, it’s not uncommon to lose an entire team in 2 years—including management.

Microchip, after 20 years of non-commissioned sales, has just 3% turnover worldwide on its client engagement team.

“We keep all the people we train. We just don’t have that turnover, and that creates a dynamic with the client,” according to Mitch. “Clients say ‘Talking to you is different than anyone else. Why is that?’”

Mitch believes it’s because employees are empowered to serve their clients’ greatest needs. They’re not paid to sell a product. They’re paid based on the value they deliver—the ideas and solutions they bring to customers. This helps everyone in the organization focus on the same goals.

World-class products are table stakes

In a business environment awash with world-class products, it’s what you do that makes a difference, not what you sell. In fact, Microchip does not have a sales process. They have a people process, engaging their internal teams, SMEs and, obviously, the customers. Their expertise is managing projects at the people level, not at the technology level.

Mitch believes business is all about the people. In the end, you are providing technology and solutions to enhance the human experience.

Check out Mitch’s book, Shiftability, available on Amazon. 100% of profits are donated to charity: water, a non-profit organization bringing clean and safe drinking water to people in developing countries.