The Top Performer and the Verbal Discount
A sales manager learns that a top performer has been booking orders under a “verbal approval” exception to the discount-approval policy. The policy requires written approval for discounts above 15%; the performer has booked 11 orders at 16–18% over four months, worth USD 1.4 million. No customer has complained, margins are still above target, and the performer is at 130% of quota. The performer says the approval was given by a director who has since left. There is no written record. Other reps have noticed, and one has asked whether the rule still applies. HR advises that a formal investigation would take three weeks and could affect the quarter.
1. What is your immediate response?
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The issue is a control breach, not whether the outcomes were good. Margins above target do not cure an unrecorded approval, and the missing director makes the claim unverifiable. Waiting three weeks would let the practice continue and signal that the rule is optional.
Immediate actions:
- Tell the performer that all discounts above 15% now require written pre-approval, effective immediately, without singling them out publicly.
- Review the 11 orders for pricing, customer commitments, and any delivery promises. Separate commercial validity from approval validity; a valid order may still be a policy breach.
- Check the delegations-of-authority record and ask the former director, through HR or legal, whether approval was given. A verbal claim is evidence to test, not a conclusion.
- Pause further exception bookings until the review is complete. Do not claw back commissions or discipline before the facts are established.
- Communicate the rule to the whole team in writing, with the approval path and a named backup approver.
The judgment is to stop the bleeding first and investigate second, while avoiding a public trial of a high performer.
2. What fairness and precedent considerations should shape the final decision?
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Fairness requires consistent treatment, but consistency does not mean identical outcomes for different facts. I would ask: did the performer know the rule, did they seek approval in good faith, and did they conceal the gap? If a director with authority gave verbal approval, the primary failure may be documentation; if not, it is a more serious conduct issue. The response should match that difference.
Precedent matters because another rep has already asked whether the rule still applies. If I tolerate the behavior because the performer is at 130% of quota, I have created a two-tier policy. If I punish harshly without evidence, I discourage disclosure and push future exceptions underground.
Proportionate outcome: a documented remediation plan, prospective written approval for all high discounts, and a review of the 11 orders for any customer or revenue risk. If the review finds concealment or unauthorized pricing, escalate to HR and legal for a formal process. I would not delay the prospective control while the investigation runs. I would also recognize the performance separately, so the message is that results matter but do not exempt anyone from controls.